NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: EXPECTED NET CASH FLOWS Year Project A Project B -$340 -$630 1 -528 210 -219 210 -150 210 1,100 210 820 210 990 210 -325 210 Construct NPV profiles for Projects A and B. Select the correct graph. VPVS) 1400 VPV5) 1400 VPV(S) 1400 1200 1200 1200 1000 1000- 1000 800 Project B 800 Project A 800 Project A 600 600 600 400 400- Project A Project B 400 200 200 200 Project B -5 Costof capitar 5 20 25 30 -5 Cost of ca tof capans 20 25 30 15 25 30 -200t -4001 Corofeital 20 -200 -200 -4001 -400I D

NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: EXPECTED NET CASH FLOWS Year Project A Project B -$340 -$630 1 -528 210 -219 210 -150 210 1,100 210 820 210 990 210 -325 210 Construct NPV profiles for Projects A and B. Select the correct graph. VPVS) 1400 VPV5) 1400 VPV(S) 1400 1200 1200 1200 1000 1000- 1000 800 Project B 800 Project A 800 Project A 600 600 600 400 400- Project A Project B 400 200 200 200 Project B -5 Costof capitar 5 20 25 30 -5 Cost of ca tof capans 20 25 30 15 25 30 -200t -4001 Corofeital 20 -200 -200 -4001 -400I D

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

See similar textbooks

Similar questions

A techniques-Decision among mutually exclusive investments Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flows Initial investment (CF) Project A $60,000 Project B $100,000 Project C $90,000 Cash inflows (CF), t=1 to 5 $20,000 $31,500 $32,000 a. Calculate the payback period for each project. b. Calculate the net present value (NPV) of each project, assuming that the firm has a cost of capital equal to 12%. c. Calculate the internal rate of return (IRR) for each project. d. Indicate which project you would recommend. a. The payback period of project A is years. (Round to two decimal places.) % [7%
Meman
Consider two mutually exclusive projects A and B: Cash Flows (dollars) Project Co C₁ A -39,000 28,200 B -59,000 42,000 C₂ NPV at 10% 28,200 42,000 +$ 9,942 +13,893 a. Calculate IRRs for A and B. Note: Do not round intermediate calculations. Enter Project A B IRR 41.98 % 36.05 %
Pls give me a correct answer
Problem 7: NPV versus IRR. Consider the following two mutually exclusive projects: Year Cash flow Cash flow (X) (Y) O 1 2 3 -9500 5800 4000 4000 PART 7A: The NPV for X is $ Answer: 2083.77 -9500 3500 5000 6000 if the required rate of return is 10%.
Hansaben
IRR and NPV A company is analyzing two mutually exclusive projects, S and L, with *the following cash flows: 1 2 3 4 Project S -$1,000 $900 $250 $250 $10 $400 $10 Project L -$1,000 $0 $800 The company's WACC is 10 percent. What is the IRR of the better project? (Hint: Note that the better project may or may not be the one with the higher IRR.)
Q 1- Nadec company is considering investment in one of two mutually exclusive projects, P and Q. The following is the data about the two projects. Project Initial investment Project life Annual cash inflow The standard deviation of cash inflow Overall cost of capital for the firm Risk-free rate of return CV of cash inflow for the firm P $10,000 5 years $4,000 $2000 12% 6% 30% Q $10,000 5 years $3,800 1,330 12% 6% 30% A- Compute the current net present value for the projects. B- Consider the risk and evaluate the projects using risk-adjusted discount rates following the six steps you have learned. C- Which project is recommended to the management to choose and why? D- Can the risk-adjusted discount rate be calculated using the CAPM?
"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).
Calculate NPV of projects S and L, NPVS & NPVL NPVS NPVL UF Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. WACC: 7.75% Year 0 1 2 3 4 CFS ($1,050) $700 $625 CFL ($1,050) $370 $370 $360 $360
O Redmond Company is considering investing in one of the following two projects: (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Year 1 2 3 4 Total Annual Cash Project A $ 2,040 3,040 3,040 1,040 $ 9,160 Inflows Project B $ 4,040 2,040 2,040 1,040 $ 9,160 Required: a. Which project is more desirable strictly in terms of cash inflows? b. Compute the present value of each project's cash inflows assuming the company's required rate of return is 12%. c. What is the maximum amount Redmond should be willing to pay for each project? d. Suppose each project costs $7,120. Which project(s) should be accepted? Required A Complete this question by entering your answers in the tabs below. Required B Required C Required D Which project is more desirable strictly in terms of cash inflows? More desirable strictly in terms of cash inflows
Net Present Value Method, Present Value Index, and Analysis First United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows: BranchOfficeExpansion ComputerSystemUpgrade ATMKioskExpansion Amount to be invested $863,421 $519,486 $311,214 Annual net cash flows: Year 1 358,000 243,000 165,000 Year 2 333,000 219,000 114,000 Year 3 304,000 194,000 83,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1. Assuming that the desired rate of return is 6%,…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS