lease answer questions 1-4 based on the following information: A and B are mutually exclusive projects. The required rate of return is 14%. • The cutoff period is 2.5 years. Year Project A Project B 0 $1,000 $1,000 200 1 550 250 Z 350 300 3 250 600 4 200 3. 2 If the company applies the NPV decision, which project should be recommended? a Project A because it has NPV of $78.81 b. Project A because it has NPV of $38.93 c Project B because it has NPV of $40.97 d. Project B because it has NPV of $100.40 If the company applies the payback period decision, which project should be recommended? a. Project A because it has payback of 2.3 years. b. Project A because it has payback of 2.4 years. c. Project B because it has payback of 2.4 years. d. Project B because it has payback of 3.2 years. e. Neither of two projects is recommended. If the company applies the MIRR decision, which project should be recommended? a. Project A because it has MIRR of 15.09%. b. Project A because it has MIRR of 12.66%. Project 8 because it has MIRR of 15-15% d. Project & because it has MIRR of 12.66% company applies P (Profitability index) decision, which project should b mended Chos Pt of 1.078 has Pf of 1099 041
lease answer questions 1-4 based on the following information: A and B are mutually exclusive projects. The required rate of return is 14%. • The cutoff period is 2.5 years. Year Project A Project B 0 $1,000 $1,000 200 1 550 250 Z 350 300 3 250 600 4 200 3. 2 If the company applies the NPV decision, which project should be recommended? a Project A because it has NPV of $78.81 b. Project A because it has NPV of $38.93 c Project B because it has NPV of $40.97 d. Project B because it has NPV of $100.40 If the company applies the payback period decision, which project should be recommended? a. Project A because it has payback of 2.3 years. b. Project A because it has payback of 2.4 years. c. Project B because it has payback of 2.4 years. d. Project B because it has payback of 3.2 years. e. Neither of two projects is recommended. If the company applies the MIRR decision, which project should be recommended? a. Project A because it has MIRR of 15.09%. b. Project A because it has MIRR of 12.66%. Project 8 because it has MIRR of 15-15% d. Project & because it has MIRR of 12.66% company applies P (Profitability index) decision, which project should b mended Chos Pt of 1.078 has Pf of 1099 041
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter19: Lease Financing
Section: Chapter Questions
Problem 2P: Lease versus Buy Consider the data in Problem 19-1. Assume that RCs tax rate is 40% and that the...
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Transcribed Image Text:lease answer questions 1-4 based on the following information:
A and B are mutually exclusive projects.
The required rate of return is 14%.
•
The cutoff period is 2.5 years.
Year
Project A
Project B
0
$1,000
$1,000
200
1
550
250
Z
350
300
3
250
600
4
200
3.
2
If the company applies the NPV decision, which project should be recommended?
a Project A because it has NPV of $78.81
b. Project A because it has NPV of $38.93
c Project B because it has NPV of $40.97
d. Project B because it has NPV of $100.40
If the company applies the payback period decision, which project should be
recommended?
a. Project A because it has payback of 2.3 years.
b. Project A because it has payback of 2.4 years.
c. Project B because it has payback of 2.4 years.
d. Project B because it has payback of 3.2 years.
e. Neither of two projects is recommended.
If the company applies the MIRR decision, which project should be recommended?
a. Project A because it has MIRR of 15.09%.
b. Project A because it has MIRR of 12.66%.
Project 8 because it has MIRR of 15-15%
d. Project & because it has MIRR of 12.66%
company applies P (Profitability index) decision, which project should b
mended
Chos Pt of 1.078
has Pf of 1099
041
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