For the projects given in the table below to: • Classify the projects into simple investment or non-simple investment. Decide if project A is accepted or rejected based on the IRR criterion, at MARR of 20%. If projects C and D are mutually exclusive projects, determine which project is more economical at MARR of 70%. PROJECT CASH FLOW SR A C -4 000 -4 000 -125 000 -125 000 8 000 760 30 000 20 000 2 -3 000 4 000 30 000 40 000 3 120 000 130 000 NOTE: The general solution of a quadratic equation (aX? + bX +c = 0) is -bt vb2 - 4ac

For the projects given in the table below to: • Classify the projects into simple investment or non-simple investment. Decide if project A is accepted or rejected based on the IRR criterion, at MARR of 20%. If projects C and D are mutually exclusive projects, determine which project is more economical at MARR of 70%. PROJECT CASH FLOW SR A C -4 000 -4 000 -125 000 -125 000 8 000 760 30 000 20 000 2 -3 000 4 000 30 000 40 000 3 120 000 130 000 NOTE: The general solution of a quadratic equation (aX? + bX +c = 0) is -bt vb2 - 4ac

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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4. NPV versus IRR Bruin, Inc., has identified the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow(A) -$ 40,000 19,100 17,800 15,200 8,400 Cash Flow(B) -$ 40,000 6,300 14,200 17,900 30,300 a. What is the IRR for each of these projects? (5%) Using the IRR decision rule, which project should the company accept? (5%) b. If the required return is 10 percent, what is the NPV for each of these projects? (5%) Which project will the company choose if it applies the NPV decision rule? (5%)
table is given below : attached image g) If projects are mutually exclusive, which project would you accept? i) at 5% ii) at 15% h) If projects are independent (not mutually exclusive), which project(s) would you accept? i) at 5% ii) at 15%
Calculate the NPVs of both Project X and Project Y. Show the NPVs for each project. If the Projects are Independent which would you approve? If the Projects are Mutually Exclusive which would you approve?
Consider the following two projects: Cash flows Project A Project B C0�0 −$ 240 −$ 240 C1�1 100 123 C2�2 100 123 C3�3 100 123 C4�4 100 a. If the opportunity cost of capital is 8%, which of these two projects would you accept (A, B, or both)? b. Suppose that you can choose only one of these two projects. Which would you choose? The discount rate is still 8%. c. Which one would you choose if the cost of capital is 16%? d. What is the payback period of each project? e. Is the project with the shortest payback period also the one with the highest NPV? f. What are the internal rates of return on the two projects? g. Does the IRR rule in this case give the same answer as NPV? h. If the opportunity cost of capital is 8%, what is the profitability index for each project? i. Is the project with the highest profitability index also the one with the highest NPV? j. Which measure should you use to choose between the projects?
The financial manager of "XY" company, is considering three projects A, B and C with the initial cost and the expected cash flows are as follows: Project C €2,200 Project A Project B €7,200 Years 1 €2,200 €2,200 3 €9,124 Initial cost €6,000 €6,000 €6,000 Investments A and B are mutually exclusive. a) Which project will the financial manager choose, based on the payback period method? b) Calculate the NPV for each project, if the cost of capital (required rate of return) is 10%. Which project will the manager choose based to this method?
Case 1: Assume you are evaluating two mutually exclusive projects,the cash flows of which appear below, and that your company uses a cost of capital of 8 percent to evaluate projects such as these. Time Project A Cash Flow Project B Cash Flow 0 -$650 -$700 1 100 300 2 250 -200 3 250 550 4 200 200 5 100 80 a. Calculate the payback of Project A. b. Calculate the discounted payback of Project A. c. Calculate the IRR of Project A. d. Using the NPV method and assuming a cost of capital of 8 percent, which of these projects should be accepted?
please be soecific w answer pls complete the box
Exercise 24-10 (Algo) Net present value, unequal cash flows, and profitability Index LO P3 Following is information on two alternative investment projects being conside return from its investments. (PV of $1, FV of $1. PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. y Tiger Company. The company requires a 4% Initial investment Project X1 $ (130,000) Project X2 $ (220,000) Net cash flows in: Year 1 Year 2 Year 3 50,000 97,500 60,500 87,500 85,500 77,500 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? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute each project's net present value. Note: Round your final answers to the nearest dollar. Net Cash Flowe Present Value of 1 at 4% Present Value of Net Cash…
3. You are analyzing the following two mutually exclusive projects and have developed the following Which information. Please calculate the IRRS for the two projects and the crossover rate. project should you accept if the cost of capital is 5%, and which project should you accept if the cost of capital is 10%? Year 0 1 3 Project A Cash Flow -$84,500 $29,000 $40,000 $27,000 IRR A: IRR B: Crossover Rate: If WACC-5%, accept If WACC=10%, accept Project B Cash Flow -$76,900 $25,000 $35,000 $26,000 J
"Consider the following two mutually-exclusive altematives: Project Alternatives n Project A1 Cash Flows Project A2 Cash Flows 0-514,000 1+$4,000 - $17,000 $21,000 2- 54,000 3-$12,000 If MARR=15% and assuming indefinite required service and repeatability, use the incremental NPV and IRR analyses in parts (a) and (b) of the problem, respectively, to choose the project in part (c). Please note that project alternatives A7 and A2 have different lives, namely three years for A1 and one year for A2. The alternatives should be compared over the same period, so project A2 will have to be repeated twice." axThe Net Present Value of the incremental investment is: YbrThe rternal Rate of Retun of the incremental investment is: (oWe shoulo choose project alternative: Note: Please enrer your onswvers to two decimal places. If using the interest factor method, apply the value of the factor os presented in the table or spreocsheet (with all four decimal places).
Mutually exclusive projects and NPV you have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows. year. Project A (cash flow) Project B 0 $(102,000) $(102,000) 1 31,000 0 2 31,000 0 3 31,000 0 4 31,000 0 5 31,000 240,000 if the appropriate discount rate on these is 11 percent, which would be chosen and why? the NPV of project A is $
Q16) Salalah company management is considering three competing investment Projects A, B and C. Year Project A Project C 1000 300 Project B Initial Investment 1000 250 1000 1 275 275 250 300 300 300 300 3 250 275 4 250 250 275 275 Assume a discount Rate of 3% Required: Use the information below and help the management in choosing the most desirable Project using the following techniques: a) Payback period b) Discounted Payback Period c) Net Present value d) Profitability index.

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