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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d) ALMOND Company is considering two important proposals with the following cash flows. Project A Project B Period (Year) Cost (Initial Net cash flow Cost (Initial Outlay) Net cash flow Outlay) 0 $45,000 $60,000 1 $25,000 $24,000 2 $20,000 $25,000 3 $15,000 $30,000 For each project, compute its net present value using a discount rate of 15%. Which project should be accepted if the projects are mutually exclusive?
The Weiland Computer Corporation is trying to choose between the following mutually exclusive design projects, P1 and P2: Year 1 3 Cash flows (P1) -$53,000 27,000 27,000 27,000 Cash flows (P2) -$16,000 9,100 9,100 9,100 a. If the discount rate is 10 percent and the firm applies the Net Present Value (NPV) decision rule, which project should the firm accept? b. If the firm applies the profitability index (PI) decision rule, which project should it take?
Information for two alternative projects involving machinery investments follows: Project 1 Initial investment Salvage value Annual income $ (128,000) Ө Project 2 $ (98,000) 18,000 14,080 11,600 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute accounting rate of return for each project. Project 1 Project 2 Numerator: Accounting Rate of Return Denominator: Required A Required B Based on accounting rate of return, which project is preferred? Based on accounting rate of return, is preferred. = Accounting rate of return
table is given below : attached image g) If projects are mutually exclusive, which project would you accept? i) at 5% ii) at 15% h) If projects are independent (not mutually exclusive), which project(s) would you accept? i) at 5% ii) at 15%
A company is considering two projects. The discount rate is 10 percent, and the projects' cash flows would be: Years 1 3 Project A -$700 $500 $300 $100 Project B -$700 $100 $300 | $600 a. Calculate the projects' NPVS and IRRS. b. If the two projects are independent, which project(s) should be chosen? c. If the two projects are mutually exclusive, which project should be chosen?
Calculate the NPVs of both Project X and Project Y. Show the NPVs for each project. If the Projects are Independent which would you approve? If the Projects are Mutually Exclusive which would you approve?
Need Answer please provide it in text Format...
Tiffany Co. is analyzing two projects for the future. Assume that only one project can be selected. Project Y Project X Cost of machine P680,000 P600,000 Net cash flow: Year 1 240,000 40,000 Year 2 240,000 260,000 Year 3 240,000 260,000 Year 4 0 200,000 If the company is using the payback period method and it requires a payback of three years or less, which project should be selected? Group of answer choices Project Y. Project Y because it has a lower initial investment. Both X and Y are acceptable projects. Project X. Neither X nor Y is an acceptable project.
The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs $7,000 and has an expected life of 3 years. Annual project cash flows begin 1 year after the initial investment and are subject to the following probability distributions: Project A Project B Probability Cash Flows Probability Cash Flows 0.2 $6,250 0.2 $0 0.6 $7,000 0.6 $7,000 0.2 $7,750 0.2 $19,000 BPC has decided to evaluate the riskier project at 12% and the less-risky project at 10%. a. What is each project's expected annual cash flow? Round your answers to two decimal places. Project A: $ Project B: $ Project B's standard deviation (σB) is $6,131.88 and its coefficient of variation (CVB) is 0.77. What are the values of (σA) and (CVA)? Round your answers to two decimal places. σA = $ CVA = b. Based on the risk-adjusted NPVs, which project should BPC choose? c. If you knew that Project B's cash flows were negatively correlated with the firm's other cash flow, but Project A's cash flows…
Cooney Co. is evaluating the following mutually exclusive projects. The manager has determined that the appropriate discount rate is 6.2% for all the recommended projects. Rank order the projects based on the profitability index. 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
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

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