Projects S and L, whose cash flows are shown below, are mutually exclusive and equally risky. Hooper Inc. is considering which of these two projects to undertake. At what discount rate will Hooper be indifferent between the two projects? Year 1 2 3 4 CF(S) -$2,050 $750 $760 $770 $780 CF(L) -$4,300 $1,500 $1,518 $1,536 $1,554 20.54% 10.35% 11.89% 16.43% 13.28% Hide hint for Question 16 This is another way of asking for the crossover rate.

Galaxy Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone. How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost. WACC: 11.00% Year CFS CFL O $53.31 O $3.50 O $63.57 O $43.16 0 -$950 -$2,100 1 2 $500 $800 $400 $800 3 $0 $800 4 $0 $1,000

XYZ Corporation evaluates two projects. Projects x and y; the below table shows their cash flows. These projects are mutually exclusive, equally risky and are not repeatable. If the decision is made by choosing the Project with the higher IRR, how much value will be forgone? Wacc %8   0 1 2 3 4 CF(X) ($1,050) $675 $650     CF(Y) ($1,050) $360 $360 $360 $360 a. IRR of Project X: %.......... b. IRR of Project Y: %.......... c. NPV of Project X: $............ d. NPV of Project Y: $............ e. The Value forgone: $..............

XYZ Corporation evaluates two projects. Projects x and y; the below table shows their cash flows. These projects are mutually exclusive, equally risky and are not repeatable. If the decision is made by choosing the Project with the higher IRR, how much value will be forgone? Wacc %8   0 1 2 3 4 CF(X) ($1,050) $675 $650     CF(Y) ($1,050) $360 $360 $360 $360 IRR of Project X: %17 IRR of Project Y: %14 NPV of Project X: $132 What are: a. NPV of Project Y: $............ b. The Value forgone: $..............

Carolina Company is considering Projects S and L, whose cash flows the table below shows. These projects are mutually exclusive, equally risky, and are not repeatable. If the decision is made by choosing the higher IRR project, how much value will be forgone? Note that selecting projects based on the IRR will cause $0.00 value to be lost under some conditions. Identify also the range of discount rates in which project L will be selected. WACC: 7.75% Year 0 1 2 3 4 CFS −$1,050 $675 $650 CFL −$1,050 $360 $360 $360 $360 Please show work in Excel. I'm having trouble finding the discount rates.

Calculate the payback period, net present value, and internal rate of return for Project A. Assume a discount rate of 10%. Should the firm accept or reject Project A? Explain. If Project A and Project B are mutually exclusive, which is the better choice? Explain. What are “non-conventional” cash flows? What issues arise when evaluating projects with “non-conventional” cash flows? Project A   Project B Year Cash Flow Year Cash Flow   0 -$100,000 0 -$1   1 $70,000 1 $0   2 $0 2 $0   3 $50,000 3 $10

the Kosovski Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. If decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost. WACC: CFS CFL a. $35.69 b. $29.26 c. $31.31 d. $26.33 e. $34.82 6.25% 0 -$1,050 -$1,050 1 $675 $360 2 $650 $360 3 $360 4 $360

The Weiland Computer Corporation is trying to choose between the following mutually exclusive design projects, P1 and P2: Year 1 3 Cash flows (P1) -$53,000 27,000 27,000 27,000 Cash flows (P2) -$16,000 9,100 9,100 9,100 a. If the discount rate is 10 percent and the firm applies the Net Present Value (NPV) decision rule, which project should the firm accept? b. If the firm applies the profitability index (PI) decision rule, which project should it take?

Kosovski Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost. WACC: 10.75%           0 1 2 3 4 CFS -$775 $560 $535     CFL -$775 $315 $315 $315 $315 Please explain the process and provide calculations.

Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 8% Year CFS CFL O $39.45 O $42.83 O $48.56 O $53.70 O $59.24 0 -$1,100 -2,200 1 $380 $730 2 $380 $730 3 $380 $730 4 $380 $730