A) What is the IRR for Project A and B?B) if required return is 8%, what is the NPV of project A and project B?C) at what discount rate would the company be indifferent between these 2 project? Bruin, Incorporated, has identified the following two mutually exclusive projects:Year Cash Flow (A)Cash Flow (B)0-$ 40,000-$40,000119,3005,700214,80012,200312,30018,70049,30022,700

Answered: Bruin, Incorporated, has identified the…

Bruin, Incorporated, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 1 234 -$40,000 19,300 14,800 12,300 9,300 -$40,000 5,700 12,200 18,700 22,700

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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Similar questions

the rate of return is the break-even interest rate i at which the annual equivalent cost of a project is zero. true or false
Assume a project has a discounted payback that equals the project's life. The project's sales quantity must be at which one of these break-even points? Select one: O a. Accounting O b. Leveraged O c. Marginal O d. Cash Oe. Financial
The NPV of a project is negative when the discount rate at 8%, but is positive when the discount rate is at 6%, which of the following choices could be the IRR for the project? Select one: a.8% b.9% C.5% d.7%
Which of the following is true? Discounted Payback Period is by definition longer than the Non-Discounted Payback Period as long as the discount rate is greater than zero. A project has a positive NPV if its Profitability Index is less than 1. a and b None of the above
Using image: a-1. What is the payback period for each project a-2. If you apply the payback criterion, which investment will you choose? b-1. What is the discounted payback period for each project? b-2. If you apply the discounted payback criterion, which investment will you choose? c-1. What is the NPV for each project? c-2. If you apply the NPV criterion, which investment will you choose? d-1. What is the IRR for each project? d-2. If you apply the IRR criterion, which investment will you choose? e-1. What is the profitability index for each project? e-2. If you apply the profitability index criterion, which investment will you choose? f. Based on your answers in (a) through (e), which project will you finally choose?
Investment A has a 8.25% internal rate of return and Investment B has a 10.0% internal rate of return. The two investments are mutually exclusive. If the required return is 6.50%, which of the following is a true statement? a) Investment A should be chosen over Investment B. b) Both Investment A and Investment B should be chosen. c) Investment B should be chosen over Investment A. d) It is not possible to know which of the two investments is best with the given information.
If the net present value of A is +$60 and of B is +$30, then what is the net present value of the combined project?
The internal rate of return (IRR) is the: Multiple Choice discount rate that results in a zero net present value for the project. discount rate that causes a project's aftertax income to equal zero.
Please solve and provide the steps for the problem provided below
The five alternatives shown below are being evaluated by the rate of return method. Incremental ROR when compared with alternative B C D 27.3 9.4 35.3 25 E 1.5 38.5 24.4 Alt B D E Initial Invest, $ ROR vs DN,% 9.6 15.1 -25,000 -35,000 -40,000 -60,000 -75,000 13.4 25.4 20.2 A --- --- (d) Alt D 46.5 27.3 6.8 ... If the projects are mutually exclusive and the Minimum Attractive Rate of Return is 9.2% per year, the best alternative is: (a) Alt A (b) Alt B (c) Alt C (e) Alt E
NPV versus IRR (LO1, 5) Consider the following two mutually exclusive projects: Year 0 Cash Flow (X) -$20,000 Cash Flow (Y) 2 3 8,850 9,100 8,800 -$20,000 10,100 7,800 8,700 Sketch the NPV profiles for X and Y over a range of discount rates from 0 to 25%. What is the crossover rate for these two projects?
3. Project A and Project B are mutually exclusive. Project A has an IRR of 22.5 and Project B has an IRR of 30.8. The two projects happen to have equal net present value at a discount rate of 16.25%. The firms cost of capital is 12 percent. Explain with a graph, which project creates more value and which project should be chosen.

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