Quèstion 6 The initial step in the capital budgeting process is O estimating cash flows O selecting appropriate evaluation techniques generating capital investment project proposals determining the proposed project's marginal cost of funding None of the listed items is the initial step.

Quèstion 6 The initial step in the capital budgeting process is O estimating cash flows O selecting appropriate evaluation techniques generating capital investment project proposals determining the proposed project's marginal cost of funding None of the listed items is the initial step.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 23SP

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Reject A, accept B and Accept A, reject B are both incorrect.
L A Moving to another question will save this response. Question 2 Which of the following is NOT relevant to the evaluation of a proposed project? O Incremental cash flows O Sunk costs associated with adoption of a project O Any tax effects Assets which the firm finances O Each of the listed items is relevant to the evaluation of a project. A Moving to another question will save this response. MacBook Ai esc F1 D00 F4 F2 F3 F5 F6 $ 4 Q W E R T A S F C V # 3
A Moving to another question will save this response. Question 6 What of the following is a drawback of using the payback method to evaluate capital projects? O Payback can result in value-decreasing decisions O Payback does not consider the time value of money O Payback does not consider risk O Payback does not consider all the cash flows of the project O All choices are correct A Moving to another question will save this response. MacBook Air 딤 F3 esc F2 - FS # $ & * 4 7 8 Q W R Y F C V elt option command D. S]
Use attachment to answer question q3- This question relates to the diagram, which shows the NPV profile for Projects X and Y. What is the Internal Rate of Return of Project X? Select one: a. 13% b. 9% c. 4% d. 10%
A Moving to another question will save this response. Question 4 Which type project is one whose acceptance or rejection does not directly eliminate other projects from consideration. O capital budgeting project O mutually exclusive project O contingent project O independent project O None of the listed selections is correct A Moving to another question will save this respeonse MacBook Air esc V11 FI F7 F4 F6 F5 %23 %24 4. & 5 Q R Y U A D. F C V alt option command
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Use attachment to answer question q2- This question relates to the diagram, which shows the NPV profile for Projects X and Y. At what cost of capital are we indifferent between Projects X and Y? Select one: a. 13% b. 4% c. 10% d. 9%
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Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site. Gardial Fisheries is considering two mutually exclusive investments. The projects expected net cash flows are as follows: a. If each projects cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? b. Construct NPV profiles for Projects A and B. c. What is each projects IRR? d. What is the crossover rate, and what is its significance? e. What is each projects MIRR at a cost of capital of 12%? At r = 18%? (Hint: Consider Period 7 as the end of Project Bs life.) f. What is the regular payback period for these two projects? g. At a cost of capital of 12%, what is the discounted payback period for these two projects? h. What is the profitability index for each project if the cost of capital is 12%?
Details WACC 0 SGWN-O 1 2 3 4 5 6 7.80% Project A Project B -1225 395 402 423 432 489 512 -2146 592.5 603 634.5 648 733.5 768 1. Construct NPV profile table by using cashflows from Project A and B above. 2. Draw NPV profile 3. Compute crossover rate To receive EC your work has to be done in Excel.
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A firm is considering the following independent projects. Project Investment Present value offuture cash flows NPV A $130 $176 $46 B $103 $115 $12 C $183 $287 $104 D $161 $199 $38 E $184 $273 $89 What is the Profitability Index of Project B? Question 5Answer a. 0.85 b. 1.12 c. 0.89 d. 1.18