Following is information on two alternative investment projects being considered by Tiger Company. The compa requires a 5% return from its investments. (PV of $1, FV of $1. PVA of $1, and FVA of $1) (Use appropriate facto from the tables provided.) Initial investment Net cash flows in: Year 1 Year 2 Year 3 Required A Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X2 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X1 $ (112,000) a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? $ 41,000 51,500 76,500 Complete this question by entering your answers in the tabs below. Required B Required C Compute each project's net present value. (Round your final answers to the nearest dollar.) Net Cash Flows Present Value of Net Cash Flows 0 Present Value of 1 at 5% Project X2 $ (184,000) $ 84,000 74,000 64,000 $ $ 0 0

Following is information on two alternative investment projects being considered by Tiger Company. The compa requires a 5% return from its investments. (PV of $1, FV of $1. PVA of $1, and FVA of $1) (Use appropriate facto from the tables provided.) Initial investment Net cash flows in: Year 1 Year 2 Year 3 Required A Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X2 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X1 $ (112,000) a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? $ 41,000 51,500 76,500 Complete this question by entering your answers in the tabs below. Required B Required C Compute each project's net present value. (Round your final answers to the nearest dollar.) Net Cash Flows Present Value of Net Cash Flows 0 Present Value of 1 at 5% Project X2 $ (184,000) $ 84,000 74,000 64,000 $ $ 0 0

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 13P

See similar textbooks

Similar questions

Owe
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 7% return from its investments (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided.) Initial investment Net cash flows in: Year 1 Year 2 Year 3 Required A Required B Project X1 Year 11 Year 2 Year 3 a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? Totals Initial investment Net present value Complete this question by entering your answers in the tabs below. Project X2 Year 1 Year 2 Year 3 Totais Initial investment S Project X1 $ (116,000) Compute each project's net present value. (Round your final answers to the nearest dollar) Net Cash Flows Present Value of Net Cash Flows S 43,000 53,500 78,500 Required C O 0 Present Value of 1 at 7% Project X2 $ (192,000) $ 87,000 77,000…
Determine the IRR of the project and the NPV of the project at a cost of capital of 12% using the Excel functions. For the calculation of NPV, includecash flows 1 through 5 in the NPV function and then subtract the initial cost(i.e., = NPV1rate, CF1 CF52 + CF02. For IRR, include cash flows 0 through 5 inthe cash flow range
The following are the cash flows of two projects: Project B Year Project A $ (300) 0 $ (300) 1 180 200 2 180 200 3 180 200 4 180 If the opportunity cost of capital is 12%, what is the profitability index for each project? Note: Do not round intermediate calculations. Round your answers to 4 decimal places. Project A B Profitability Index
Consider the following project-balance profiles for proposed investment projects, where the project-balance figures are rounded to the nearest dollar: (a) Compute the net present worth of each investment.(b) Determine the project balance at the end of period 2 for Project C ifA2 = $500.(c) Determine the cash flows for each project.(d) Identify the net future worth of each project.
H1.
Consider the cash flows for the investment projects given in Table. Assume that the MARR = 10%. (a) Suppose A, B, and C are mutually exclusive projects. Which project would be selected on the basis of the IRR criterion (b) Assume that projects C and È are mutually exclusive. Using the IRR criterion, which Project would you select? Net Cash Flow A В C D E -4,250 3,200 2,850 -4,250 1,500 3,250 1,600 1,200 -4,250 2,850 -4,850 2,100 2,100 2,100 2,100 2,500 1 -835 2,900 1,050 500 2 -835 3 800 -835 4 300 -835
A project has the following cash flows set out below. What is the profitability index of this project if the relevant discount rate is 2 percent? Enter your final answer to two decimal places. Year Cash flow 0 -1,745 1 537 2 2,066 3 3,912
ss
The following are the cash flows of two projects: Year Project A Project B 0 $ (200) $ (200) 1 80 100 2 80 100 3 80 100 4 80 If the opportunity cost of capital is 11%, what is the profitability index for each project Note: Do not round intermediate calculations. Round your answers to 4 decimal places.
Consider the following projects: Cash Flows ($) Project D E CO00 C101 -11,700 23,400 -21,700 37,975 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 12%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose?
Calculate/estimate the IRR(s) for a 6-year project with the following cash flows: CF0 = -50, CF1 =28 = CF2 = CF3 = CF4 = CF5, and CF6 = -93. In Excel, plot the NPV (= Y axis) against r (= discountrate), using r = 0%, 2%, and so on until you find all IRRs in the chart. Identify/estimate all IRRs.