c. What is each project's IRR? (Hint: Using the Excel IRR function, set the guess parameter to be 10%.) Round your answers to two decimal places. IRR (Project A): 18.10 % IRR (Project B): 23.25 % d. What is the crossover rate, and what is its significance? (Hint: Using the Excel IRR function, set the guess parameter to be 10%.) Round your answer for the crossover rate to two decimal places and for the NPV to the nearest cent. The crossover rate is 11.998 %. The crossover rate represents the cost of capital at which the two projects have the NPV of $ e. What is each project's MIRR at a cost of capital of 8%? At r = 17%? Round your answers to two decimal places. MIRR at r = 8% MIRR at r = 17% Project A 12.89 17.56 Project B % 15.24 % % 19.89 % f. What is the regular payback period for these two projects? Round your answers to two decimal places. Regular payback period (Project A): 5.55 years Regular payback period (Project B): 4.31 years g. At a cost of capital of 8%, what is the discounted payback period for these two projects? Round your answers to two decimal places. Discounted payback period (Project A): 5.98 years Discounted payback period (Project B): 3.01 years h. What is the profitability index for each project if the cost of capital is 8%? Round your answers to three decimal places. Profitability index (Project A): 1.075 ☑ Profitability index (Project B): .575 X Start with the partial model in the file Ch12 P25 Build a Model.xlsx. Gardial Fisheries is considering two mutually exclusive investments. The projects' expected net cash flows are as follows: Expected Net Cash Flows Year Project A Project B 0 -$395 -$595 1 -360 180 2 -240 180 3 -120 180 4 720 180 5 720 180 6 7 912 -240 180 180 The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Download spreadsheet Ch12 P25 Build a Model-bd95d6.xlsx a. If each project's cost of capital is 8%, which project should be selected? Round your answers to the nearest cent. NPV (Project A): $ NPV (Project B): $ 424.56 342.15 Project A should be selected. If the cost of capital is 17%, what project is the proper choice? Round your answers to the nearest cent. NPV (Project A): $ 35.25 NPV (Project B): $ Project B 111.03 should be selected.

c. What is each project's IRR? (Hint: Using the Excel IRR function, set the guess parameter to be 10%.) Round your answers to two decimal places. IRR (Project A): 18.10 % IRR (Project B): 23.25 % d. What is the crossover rate, and what is its significance? (Hint: Using the Excel IRR function, set the guess parameter to be 10%.) Round your answer for the crossover rate to two decimal places and for the NPV to the nearest cent. The crossover rate is 11.998 %. The crossover rate represents the cost of capital at which the two projects have the NPV of $ e. What is each project's MIRR at a cost of capital of 8%? At r = 17%? Round your answers to two decimal places. MIRR at r = 8% MIRR at r = 17% Project A 12.89 17.56 Project B % 15.24 % % 19.89 % f. What is the regular payback period for these two projects? Round your answers to two decimal places. Regular payback period (Project A): 5.55 years Regular payback period (Project B): 4.31 years g. At a cost of capital of 8%, what is the discounted payback period for these two projects? Round your answers to two decimal places. Discounted payback period (Project A): 5.98 years Discounted payback period (Project B): 3.01 years h. What is the profitability index for each project if the cost of capital is 8%? Round your answers to three decimal places. Profitability index (Project A): 1.075 ☑ Profitability index (Project B): .575 X Start with the partial model in the file Ch12 P25 Build a Model.xlsx. Gardial Fisheries is considering two mutually exclusive investments. The projects' expected net cash flows are as follows: Expected Net Cash Flows Year Project A Project B 0 -$395 -$595 1 -360 180 2 -240 180 3 -120 180 4 720 180 5 720 180 6 7 912 -240 180 180 The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Download spreadsheet Ch12 P25 Build a Model-bd95d6.xlsx a. If each project's cost of capital is 8%, which project should be selected? Round your answers to the nearest cent. NPV (Project A): $ NPV (Project B): $ 424.56 342.15 Project A should be selected. If the cost of capital is 17%, what project is the proper choice? Round your answers to the nearest cent. NPV (Project A): $ 35.25 NPV (Project B): $ Project B 111.03 should be selected.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 23SP: Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site....

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