Current Attempt in Progress Sheridan Corp. management is evaluating two independent projects. The costs and expected cash flows are given in the following table. The cost of capital is 12.84 percent. Year A B 0 -$265,930 -$382,916 1 109,500 148,190 2 109,500 142,830 3 109,500 149,500 4 109,500 128,800 5 109,500 119,800 4. a. Calculate the projects' NPV. (Enter negative amounts using negative sign eg. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to O decimal places, e.g. 1,525.) The NPV of project A is $ and project B is $ b. Calculate the projects' IRR. (Round answer to 2 decimal places, e.g. 15.25%) The IRR of Project A is % and Project B is c. Which project should be chosen based on NPV? Based on IRR? Is there a conflict? Sheridan should choose There is ✓ between the NPV and IRR decisions. d. If you are the decision maker for the firm, which project or projects will be accepted? will be accepted. eTextbook and Media Search %. Attempts 0 of 3used Submit AnQuer

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
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Current Attempt in Progress
Sheridan Corp. management is evaluating two independent projects. The costs and expected cash flows are given in the following
table. The cost of capital is 12.84 percent.
Year
A
B
0
-$265,930
-$382,916
1
109,500
148,190
2
109,500
142,830
3
109,500
149,500
4
109,500
128,800
5
109,500
119,800
4.
a. Calculate the projects' NPV. (Enter negative amounts using negative sign eg. -45.25. Do not round discount factors. Round other
intermediate calculations and final answer to O decimal places, e.g. 1,525.)
The NPV of project A is $
and project B is $
b. Calculate the projects' IRR. (Round answer to 2 decimal places, e.g. 15.25%)
The IRR of Project A is
% and Project B is
c. Which project should be chosen based on NPV? Based on IRR? Is there a conflict?
Sheridan should choose
There is
✓ between the NPV and IRR decisions.
d. If you are the decision maker for the firm, which project or projects will be accepted?
will be accepted.
eTextbook and Media
Search
%.
Attempts 0 of 3used Submit AnQuer
Transcribed Image Text:Current Attempt in Progress Sheridan Corp. management is evaluating two independent projects. The costs and expected cash flows are given in the following table. The cost of capital is 12.84 percent. Year A B 0 -$265,930 -$382,916 1 109,500 148,190 2 109,500 142,830 3 109,500 149,500 4 109,500 128,800 5 109,500 119,800 4. a. Calculate the projects' NPV. (Enter negative amounts using negative sign eg. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to O decimal places, e.g. 1,525.) The NPV of project A is $ and project B is $ b. Calculate the projects' IRR. (Round answer to 2 decimal places, e.g. 15.25%) The IRR of Project A is % and Project B is c. Which project should be chosen based on NPV? Based on IRR? Is there a conflict? Sheridan should choose There is ✓ between the NPV and IRR decisions. d. If you are the decision maker for the firm, which project or projects will be accepted? will be accepted. eTextbook and Media Search %. Attempts 0 of 3used Submit AnQuer
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