needs to decide it it will move3 a companyForward with a new projects that is evaluatinProjects. As cash flow projections are shown inA19 through F20, & project Bs projections areShown in A22 through G23Project Ayear234Cash Flow |-800,000 220.000 265.000 292.000 317,000Project BDDyear2345Cash Flow 1-650,000 175,000 175,000 175,000 175.000 175.000Based on the risk of each projet, the companyhas a required rate of return of 11010 for-project A and 11.5016 for project B. The companyhas a $1.5 millon budget to spend on newprojects for the year. Should the componymove forward with one, both, or neitherof the two new projects?

The objective of the question is to determine whether the company should proceed with Project A,…

Answered: needs to decide it it will move 3 a…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section: Chapter Questions

Problem 23SP

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onsider the following projects: Project Cash Flows ($) C0�0 C1�1 C2�2 C3�3 C4�4 C5�5 A −2,600 2,600 0 0 0 0 B −5,200 2,600 2,600 5,600 2,600 2,600 C −6,500 2,600 2,500 0 2,600 2,600 If the opportunity cost of capital is 10%, which project(s) have a positive NPV? Calculate the payback period for each project. Which project(s) would a firm using the payback rule accept if the cutoff period is three years?
2.
2. You are evaluating an investment project with the following cash flows : Period Cash Flows - $200 000 1 $40 000 2 $60 000 3 $75 000 4 $ 80 000 Assuming the cost of capital 10%, calculate the following (in excel): Payback period Discounted Payback Period а. b. C. NPV d. PI е. IRR
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?
Q5. Consider the investment projects given in the following table: Net Cash Flow n Project A Project B Project C - $100 - S150 - $10 1 30 50 410 2 50 50 -558 3 50 252 4 50 21.11% Assume that MARR = 12% in the following questions: IRR 23.24% 20%, 40%, 50% Identify simple and non-simple projects. Identify pure and mixed investments. Determine the IRR for Project C. (Hint: You can use trial-error method followed by linear interpolation.) Which project(s) is(are) acceptable? b) c) d)
2 Calculate the NPV in all of the following cash flow projections shown in Ala through G13 based on a required rate of 10.50/0 NPV calculation: PV=CF/(1+r)^n 20 0 T year 23 4 cash Flow 4.120,000 35,000 47,500 55,000 62,000 1 Is this a good project for the business to accept? Explain dratchimphi & tant Labe Richie 70
12q-19
What would be the correct solution to the attached?
Consider the following investment projects.Year (n) Net Cash FlowProject 1 Project 20 -$1,200 -$2,0001 600 1,5002 1,000 1,000IRR 19.65% 17.54%Determine the range of MARR where project 2 would be preferred over project 1.(a) MARR … 12.5%(b) 13% … MARR … 15%(c) 16% … MARR(d) Not enough information to determine
Projects W and X are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. Year Project W Project X 0 –$1,000 –$1,500 1 $200 $350 2 $350 $500 3 $400 $600 4 $600 $750 0 2 4 6 8 10 12 14 16 18 20 800 600 400 200 0 -200 NPV (Dollars) DISCOUNT (REQUIRED) RATE (Percent) Project X Project W If the required rate of return for each project is 2%, do the NPV and IRR methods agree or conflict? The methods conflict. The methods agree.
19. Belgian Bite Corp. is considering a project that has the following cash flow data. What is the project's IRR? Year 0 1 2 3 Cash flows −$1,100 $450 $470 $490 Group of answer choices 11.98% 10.78% 14.64% 13.31% 9.70%
A company is analyzing two mutually. exclusive projects, 5 and I, with the following cash flows Project S - $1,000 Project L - $1,000 + $877.34 $10 2 + $260 $260 $100 company's WACC is 9.5%. What is the project? The IRR of the better 3 $15 $380 4 $5 $795.76 Consider Pend ts and B 13. If

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