llowing cash on two mutually exclusive projects for the Banamas Recrea Corporation. Bo projects require an annual return of 16 percent. Deepwater Year Fishing Submarine Ride Ө -$995,000 -$ 1,940,000 1 415,000 990,000 2 546,000 845,000 3 465,000 840,000 a-1. Compute the IRR for both projects. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-2. Based on the IRR, which project should you choose? b-1. Calculate the incremental IRR for the cash flows. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b-2. Based on the incremental IRR, which project should you choose? c-1. Compute the NPV for both projects. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. c-2. Based on the NPV, which project should you choose? c-3. Is the NPV rule consistent with the incremental IRR rule? a-1. Deepwater Fishing IRR Submarine Ride IRR a-2. IRR decision b-1. Incremental IRR b-2. Incremental IRR decision c-1. Deepwater fishing NPV Submarine ride NPV 19.94 % 18.57% Deepwater fishing 16.93 % Submarine ride
llowing cash on two mutually exclusive projects for the Banamas Recrea Corporation. Bo projects require an annual return of 16 percent. Deepwater Year Fishing Submarine Ride Ө -$995,000 -$ 1,940,000 1 415,000 990,000 2 546,000 845,000 3 465,000 840,000 a-1. Compute the IRR for both projects. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-2. Based on the IRR, which project should you choose? b-1. Calculate the incremental IRR for the cash flows. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b-2. Based on the incremental IRR, which project should you choose? c-1. Compute the NPV for both projects. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. c-2. Based on the NPV, which project should you choose? c-3. Is the NPV rule consistent with the incremental IRR rule? a-1. Deepwater Fishing IRR Submarine Ride IRR a-2. IRR decision b-1. Incremental IRR b-2. Incremental IRR decision c-1. Deepwater fishing NPV Submarine ride NPV 19.94 % 18.57% Deepwater fishing 16.93 % Submarine ride
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
Related questions
Question
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
Transcribed Image Text:llowing cash
on two mutually exclusive projects for the Banamas Recrea
Corporation. Bo
projects require
an annual return of 16 percent.
Deepwater
Year
Fishing
Submarine Ride
Ө
-$995,000
-$ 1,940,000
1
415,000
990,000
2
546,000
845,000
3
465,000
840,000
a-1. Compute the IRR for both projects.
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
a-2. Based on the IRR, which project should you choose?
b-1. Calculate the incremental IRR for the cash flows.
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
b-2. Based on the incremental IRR, which project should you choose?
c-1. Compute the NPV for both projects.
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
c-2. Based on the NPV, which project should you choose?
c-3. Is the NPV rule consistent with the incremental IRR rule?
a-1. Deepwater Fishing IRR
Submarine Ride IRR
a-2. IRR decision
b-1. Incremental IRR
b-2. Incremental IRR decision
c-1. Deepwater fishing NPV
Submarine ride NPV
19.94 %
18.57%
Deepwater fishing
16.93 %
Submarine ride
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