Bruin, Incorporated, has identified the following two mutually exclusive projects: Year 0 1 2 1234 3 Cash Flow (A) -$ 59,000 35,000 29,000 20,500 13,800 Cash Flow (B) -$ 59,000 22,100 26,100 31,000 25,100
Bruin, Incorporated, has identified the following two mutually exclusive projects: Year 0 1 2 1234 3 Cash Flow (A) -$ 59,000 35,000 29,000 20,500 13,800 Cash Flow (B) -$ 59,000 22,100 26,100 31,000 25,100
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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Question
Bruin, Incorporated, has identified the following two mutually exclusive projects
Please help me solve this problem using Excel.
Transcribed Image Text:Bruin, Incorporated, has identified the following two mutually exclusive
projects:
Year
0
AWN TO
1
2
3
4
Cash Flow (A)
-$ 59,000
35,000
29,000
20,500
13,800
Cash Flow (B)
-$ 59,000
22,100
26,100
31,000
25,100
a-1. What is the IRR for each of these projects?
Note: Do not round intermediate calculations and enter your answers as a
percent rounded to 2 decimal places, e.g., 32.16.
a-2. If you apply the IRR decision rule, which project should the company
accept?
b-1. Assume the required return is 15 percent. What is the NPV for each of
these projects?
Note: Do not round intermediate calculations and round your answers to
2 decimal places, e.g., 32.16.
b-2. Which project will you choose of you apply the NPV decision rule?
c-1. Over what range of discount rates would you choose Project A?
Note: Do not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.
c-2. Over what range of discount rates would you choose Project B?
Note: Do not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.
d. At what discount rate would you be indifferent between these two
projects?
Note: Do not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.
Transcribed Image Text:a-1. Project A
Project B
a-2.
b-1.
b-2.
C-1.
c-2.
d.
Project A
Project B
Discount rate
%
%
%
%
%
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