Delphi Inc is currently evaluating two (2) mutually exclusive projects. The following represents theexpected cash flows for both projects. The company's discount rate is 12%.Years Project: Repair Project: Replace0(350,000)1125,0002125,0003225,000(400,000)175,000100,000125,000Year PV Factor (12%)1230.89290.79720.7118Required: a. Using the following, indicate which project(s) should be chosen under each selectioncriterion: i. Discounted Payback ii. Net Present Value b. Compute the Internal Rate of Return forProject Repair only, if it falls between 12% and 16%. Should the company accept this project underthe IRR criteria, why?Year123PV Factor (16%)0.86210.74320.6407c. Companies may utilize any of the criteria above to evaluate projects. Identify the criterion that isconsidered the most favorable, outline any three (3) advantages of this criterion.

Explanation of Net Present Value (NPV):Net Present Value (NPV) is a financial metric used to…

Answered: Delphi Inc is currently evaluating two…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 22E

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Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
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Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 29,800 012345 12,000 14,700 16,600 13,700 -10,200 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %
Solo Corp. is evaluating a project with the following cash flows: Year 0 O12345 Cash Flow -$28,300 10,500 13,200 15,100 12,200 8,700 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR % Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR % Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 30,000 012345 12,200 14,900 16,800 13,900 -10,400 The company uses an interest rate of 8 percent on all of its projects. Calculate the MIRR of the project. (Do not round intermediate calculation your answer as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR %
Solo Corp, is evaluating a project with the following cash flows: Cash Flow -$28,200 10,400 Year 0 12440 3 5 13,100 15,000 12,100 8,600 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. MIRR Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) %
Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project? Year0 ($11,368,000)1 $2,112,5892 $3,787,5523 $3,300,6504 $4,115,8995. $ 4,556,424 Round to two decimal places. For year 0 , its initial investment .
ces Duo Corporation is evaluating a project with the following cash flows: Year 0 Cash Flow -$ 29,100 -2345 1 11,300 14,000 15,900 13,000 -9,500 The company uses a discount rate of 12 percent and a reinvestment rate of 7 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR % c. Combination approach MIRR %
Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$ 28,000 1 10,200 2 12,900 3 14,800 4 11,900 5 – 8,400 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project? Year Project 0 (S 11,368, 000) 1 $ 2, 202, 589 2 $ 3,787, 552 3 $ 3, 300, 650 4 $ 4, 115, 899 5 $ 4, 556, 424 Round to two decimal places.
To Duo Corporation is evaluating a project with the following cash flows: Cash Flow -$ 15,100 6,200 7,400 7,000 Year 8 1 2 3 4 5 5,000 -3,200 The company uses an interest rate of 11 percent on all of its projects. Calculate the MIRR of the project using all three methods. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Discounting approach Raimustment appr Combination approach %
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 -$ 29,100 1 11,300 2 14,000 3 15,900 4 13,000 5 -9,500 The company uses a discount rate of 12 percent and a reinvestment rate of 7 percent on all of Its projects. Calculate the MIRR of the project using the discounting approach. (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR % Calculate the MIRR of the project using the reinvestment approach. (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 3216.) MIRR PA Calculate the MIRR of the project using the combination approach. (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal

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