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What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: Calculate the two projects' NPVS, if each project's cost of capital was 11%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ Which project, if either, should be selected? v should be selected. -Select- Calculate the two projects' NPVS, if each project's cost of capital was 16%. Do not round intermediate calculations. Round your answers to the nearest cent.

What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: Calculate the two projects' NPVS, if each project's cost of capital was 11%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ Which project, if either, should be selected? v should be selected. -Select- Calculate the two projects' NPVS, if each project's cost of capital was 16%. Do not round intermediate calculations. Round your answers to the nearest cent.

Essentials Of Investments
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
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b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % c. Calculate the two projects' NPVS, if each project's cost of capital was 11%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ Which project, if either, should be selected? -Select- v should be selected. Calculate the two projects' NPVS, if each project's cost of capital was 16%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ What would be the proper choice? -Select- vis the proper choice. d. What is each project's MIRR at a cost of capital of 11%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: What is each project's MIRR at a cost of capital of 16%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: e. What is the crossover rate? Do not round intermediate calculations. Round your ansvwer to two decimal places. What is its significance? I. The crossover rate has no significance in capital budgeting analysis. II. If the cost of capital is greater than the crossover rate, both the NPV and IRR methods will lead to the same project selection. III. If the cost of capital is less than the crossover rate, both the NPV and IRR methods lead to the same project selections. -Select- V
Transcribed Image Text:b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % c. Calculate the two projects' NPVS, if each project's cost of capital was 11%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ Which project, if either, should be selected? -Select- v should be selected. Calculate the two projects' NPVS, if each project's cost of capital was 16%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ What would be the proper choice? -Select- vis the proper choice. d. What is each project's MIRR at a cost of capital of 11%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: What is each project's MIRR at a cost of capital of 16%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: e. What is the crossover rate? Do not round intermediate calculations. Round your ansvwer to two decimal places. What is its significance? I. The crossover rate has no significance in capital budgeting analysis. II. If the cost of capital is greater than the crossover rate, both the NPV and IRR methods will lead to the same project selection. III. If the cost of capital is less than the crossover rate, both the NPV and IRR methods lead to the same project selections. -Select- V
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 -$430 -$680 1 -528 210 2 -219 210 3 -150 210 4 1,100 210 820 210 6 990 210 7 -325 210 a. Construct NPV profiles for Projects A and B. Select the correct graph. A B D VPVS) 1400- VPVS) I 1400- VPS) 1400- VPVS) 1400- 1200- 1200A 1200- 1200 1000 1000 1000 1000 800- 800 800 800 Project A Project B Project A Project A 600 600 600 600 400 400 400 400 200- Project B Project A Project B - 200 200 200- Project B +.... Cost of cabar so Costof cabiar5 -5 Cost of capita 10 20 25 -5 10 20 25 -5 10 va15 20 25 30 -5 Cost of catal 20 25 30 -200 -200 -200 -200 -400 -400 -400 -4001 The correct graph is -Select- v
Transcribed Image Text: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 -$430 -$680 1 -528 210 2 -219 210 3 -150 210 4 1,100 210 820 210 6 990 210 7 -325 210 a. Construct NPV profiles for Projects A and B. Select the correct graph. A B D VPVS) 1400- VPVS) I 1400- VPS) 1400- VPVS) 1400- 1200- 1200A 1200- 1200 1000 1000 1000 1000 800- 800 800 800 Project A Project B Project A Project A 600 600 600 600 400 400 400 400 200- Project B Project A Project B - 200 200 200- Project B +.... Cost of cabar so Costof cabiar5 -5 Cost of capita 10 20 25 -5 10 20 25 -5 10 va15 20 25 30 -5 Cost of catal 20 25 30 -200 -200 -200 -200 -400 -400 -400 -4001 The correct graph is -Select- v
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