b) A construction company has identified the following two mutually exclusive projects. The company used 10% discount rate Cash flows (Project A) ($100,000) 50,000 40,000 30,000 30,000 Cash flows (Project B) ($100,000) Year 1 40,000 40,000 40,000 40,000 3 4 Calculate Net Present Value and Actual Rate of return for both the projects. How will you evaluate each project using these project evaluation methods?

b) A construction company has identified the following two mutually exclusive projects. The company used 10% discount rate Cash flows (Project A) ($100,000) 50,000 40,000 30,000 30,000 Cash flows (Project B) ($100,000) Year 1 40,000 40,000 40,000 40,000 3 4 Calculate Net Present Value and Actual Rate of return for both the projects. How will you evaluate each project using these project evaluation methods?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Cooney Co. is evaluating the following mutually exclusive projects. The manager has determined that the appropriate discount rate is 6.20% for all the recommended projects. Rank order the projects based on the net present value. Project A Project B Project C (35,000) (65,000) (86,000) Year 0 1 2 3 55,000 40,000 22,000 22,000 44,000 44,000 35,000
ZumBahlen Inc. is considering the following mutually exclusive projects: Year 0 1 2 3 4 Project A Cash Flow -$5,000 O a. 16.15% O b. 20.15% O c. 18.15% O d. 22.15% 200 800 Project B Cash Flow -$5,000 3,000 3,000 3,000 5,000 At what cost of capital will the net present value of the two projects be the same? (That is, what is the "crossover" rate?) 800 200
Emusk Inc. is evaluating two mutually exclusive projects. The required rate of return on these projects is 8%. Calculate the profitability index for project A. (Round to 3 decimals) Year 0 1 2 3 4 5 Project A -15,000,000 2,000,000 3,000,000 5,000,000 5,000,000 6,000,000 Project B -15,000,000 6,000,000 6,000,000 6,000,000 1,000,000 1,000,000
In your first job with TBL Inc. your task is to consider a new project whose data are shown below. What is the project's Year 1 cash flow? The annual operating cash flows of the project can be calculated as follows: OCF = {[Sales - Operating Costs]*(1-Tax Rate)} + (Depreciation * Tax Rate) Sales revenues $225,250 Depreciation $78,847 Other operating costs $92,000 Tax rate 18%
The profitability analysis of three projects is provided below: Project A Project B Project C NPV $10,000 $5,000 - $1,000 IRR 10% 15% 15% WACC 8% 12% 16% If these projects were independent, which project(s) would be accepted? Why? If these projects were mutually exclusive, which project(s) would be accepted? Why?
An interior design studio is trying to choose between the following two mutually exclusive design projects: Year 0 1 2 3 Cash Flow Cash Flow (0) -$64,000 31,000 31,000 31,000 a-1 If the required return is 10 percent, what is the profitability index for both projects? (Round your answers to 3 decimal places. (e.g., 32.161)) Project I Project II -$18,000 9,700 9,700 9,700 Profitability Index a-2 If the company applies the profitability index decision rule, which project should the firm accept? O Project I O Project II Project I Project II b-1 What is the NPV for both projects? (Round your answers to 2 decimal places. (e.g., 32.16)) O Project I Project II NPV b-2lf the company applies the NPV decision rule, which project should it take?
Coffer Company is analyzing two potential investments. Project X Cost of machine Net cash flow: Year 1 Year 2 $ 85,470 Project Y $ 65,000 33,000 33,000 3,000 30,000 Year 3 Year 4 33,000 0 • 30,000 25,000 If the company is using the payback period méthod, and it requires a payback period of three years or less, which project(s) should be selected? Multiple Choice Project Y. Project X. Both X and Y are acceptable projects. Neither X nor Y is an acceptable project.
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
Please help me
There are 4 different alternatives for a company investment project. Find out which project would be more suitable according to the technical data below.
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows: Project A Cash Flow Project B Cash Flow $(102,000) Year 0 1 2340 5 $(102,000) 35,000 35,000 35,000 35,000 35,000 0 0 0 0 230,000 (Click on the icon in order to copy its contents into a spreadsheet) If the appropriate discount rate on these projects is 12 percent, which would be chosen and why? The NPV of Project A is S. (Round to the nearest cent.)
.

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