d. At what discount rate would you be indifferent between these two projects? (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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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
Related questions
Question
Part D please
Transcribed Image Text:Piercy, LLC, has identified the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
-$61,000
37,000
31,000
21,500
14,200
-$ 61,000
23,900
27,900
33,000
24,900
1
3
4
a-1. What is the IRR for each of these projects? (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 12 percent. What is the NPV for each of these projects? (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? (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? (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? (Do not round
intermediate calculations and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
Transcribed Image Text:30.64 %
a-1. Project A
Project B
a-2.
27.73 %
Project A
b-1. Project A
$
21,076.36
Project B
$
21,894.14
b-2.
Project B
с-1. Above
14.79 %
c-2. Below
14.79 %
d.
Discount rate
%
%24
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