TING CRITERIA A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 2. 3 4. Project A Project B -$6,000 -$18,000 $2,000 $5,600 $2,000 $5,600 a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project b. Assuming the projects are independent, which one(s) would you recommend? If the projects are mutually exclusive, which would you recommend? d. Notice that the projects have the same cash flow timing pattern. Why is there a confmict $2,000 $5,600 $2,000 $5,600 $2,000 $5,600 C. between NP and IRR?
TING CRITERIA A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 2. 3 4. Project A Project B -$6,000 -$18,000 $2,000 $5,600 $2,000 $5,600 a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project b. Assuming the projects are independent, which one(s) would you recommend? If the projects are mutually exclusive, which would you recommend? d. Notice that the projects have the same cash flow timing pattern. Why is there a confmict $2,000 $5,600 $2,000 $5,600 $2,000 $5,600 C. between NP and IRR?
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
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o thi apital 1 O CRITERIA % Y upial gl RN A g R o » nchuing depreciaion, e a5 o o 3 4 200 00 g0 s $5600 g5ann $5600 $5600 85600 4 discounte payback for each projct €, which onets wouid you recommend? 5, Which wonld you rocommend et s ik o . Why s thers o confic between NPV and 1y ing pat Lol
Transcribed Image Text:this year's capital budget. After-tax cash flows, including depreciation,
wte
TING CRITERIA A firm with a 14% WACC is evaluating two projects for
are as follows:
2
+
$2,000
$5,600
Calculate NPV, IRR, MIRR, payback, and discounted payback for each project
b. Assuming the projects are independent, which one(s) would you recommend?
3
Project A
Project B
-$6,000
-$18,000
$2,000
$5,600
$2,000
$5,600
$2,000
$5,600
$2,000
$5,600
a.
If the projects are mutually exclusive, which would you recommend?
C.
d. Notice that the projects have the same cash flow timing pattern. Why is there a coniet
between NPV and IRR?
11.8
CAPITA I DI -
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