IRR-Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the project following table: . The firm's cost of capital is 14%. a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRS. b. Which project is preferred? a. The internal rate of return (IRR) of project X is %. (Round to two decimal places.) Data Table Is project X acceptable on the basis of IRR? (Select the best answer below.) O No (Click on the icon located on the top-right corner of the data table below copy its contents into a spreadsheet.) order to O Yes The internal rate of return (IRR) of project Y is %. (Round to two decimal places.) Project Y Project X $500,000 Initial investment (CFo) $300,000 Is project Y acceptable on the basis of IRR? (Select the best answer below.) Cash inflows (CF) $120.000 $110,000 $75,000 $80,000 $70,000 Year (f) $110,000 O Yes $160,000 $130,000 No $200,000 $250,000 4. b. Which project s preferred? (Select the best answer below.) O A. Project Y O B. Project X Print Done Click to select your answer(s).
IRR-Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the project following table: . The firm's cost of capital is 14%. a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRS. b. Which project is preferred? a. The internal rate of return (IRR) of project X is %. (Round to two decimal places.) Data Table Is project X acceptable on the basis of IRR? (Select the best answer below.) O No (Click on the icon located on the top-right corner of the data table below copy its contents into a spreadsheet.) order to O Yes The internal rate of return (IRR) of project Y is %. (Round to two decimal places.) Project Y Project X $500,000 Initial investment (CFo) $300,000 Is project Y acceptable on the basis of IRR? (Select the best answer below.) Cash inflows (CF) $120.000 $110,000 $75,000 $80,000 $70,000 Year (f) $110,000 O Yes $160,000 $130,000 No $200,000 $250,000 4. b. Which project s preferred? (Select the best answer below.) O A. Project Y O B. Project X Print Done Click to select your answer(s).
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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Transcribed Image Text:IRR-Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the
following table: 9. The firm's cost of capital is 14%.
a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRS.
b. Which project is preferred?
a. The internal rate of return (IRR) of project X is %. (Round to two decimal places.)
Data Table
Is project X acceptable on the basis of IRR? (Select the best answer below.)
No
(Click on the icon located on the top-right corner of the data table below in order to
Yes
copy its contents into a spreadsheet.)
Project X
Initial investment (CF) $500,000
Project Y
$300.000
The internal rate of return (IRR) of project Y is %. (Round to two decimal places.)
Is project Y acceptable on the basis of IRR? (Select the best answer below.)
Year (f)
Cash inflows (CF,)
1
$110,000
$120,000
$110,000
Yes
$160,000
No
$130,000
$75,000
4
$200,000
$250,000
$80,000
$70,000
b. Which project is preferred? (Select the best answer below.)
O A. Project Y
O B. Project X
Print
Done
Click to select your answer(s).
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