YearCash Flow0-$ 27,000111,0002314,00010,000What is the NPV for the project if the required return is 10 percent?Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.NPV$ 1,873.28At a required return of 10 percent, should the firm accept this project?NoYesWhat is the NPV for the project if the required return is 26 percent?

To calculate the Net Present Value (NPV) for the project at required returns of 10% and 26%, we use…

Answered: Year Cash Flow 0 -$ 27,000 1 11,000 2 3…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...

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es The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (1) Cash Flow (II) -$ 0 1 2 3 Project I Project II 67,000 30,500 30,500 30,500 a-1.If the required return is 11 percent, what is the profitability index for both projects? (Do not round Intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) a. If the company applies the profitability index decision rule, which project should the 2. firm accept? Project I Project II 17,700 9,550 9,550 9.550 O Project I O Project II b- What is the NPV for both projects? (A negative answer should be Indicated by a 1. minus sign. Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b- If the company applies the NPV decision rule, which project should it take? 2. O Project I O Project II
A project under consideration has the following cash flows: Cash Year Flow 0 $27,300 1 11,300 2 14,300 3 10,300 What is the NPV for the project if the required return is 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV At a required return of 10 percent, should the firm accept this project? No Yes What is the NPV for the project if the required return is 26 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV At a required return of 26 percent, should the firm accept this project? Yes
The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) 0 -$ 82,000 1 37,600 2 37,600 37,600 Cash Flow (II) -$ 21,700 11, 200 11,200 11, 200 a-1. If the required return is 10 percent, what is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. a-2. If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm accept? b-1. If the required return is 10 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. If the company applies the NPV decision rule, which project should it take? a-1. Project I Project II a-2. Project acceptance b-1. Project I Project II b-2. Project acceptance
A firm evaluates all of its projects by applying the IRR rule. Cash Flow Year 0 1 2 3 147,000 69,000 70,000 54,000 What is the project's IRR? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return % If the required return is 16 percent, should the firm accept the project?
ok ht ences A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year 0 1 2 3 Cash Flow IRR -$27,400 11,400 14,400 10,400 If the required return is 16 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) % Should the firm accept the project? Yes O No
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0. -$ 41,000 20,000 23,000 14,000 1 3. What is the NPV of the project if the required return is 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.., 32.16.) NPV At a required return of 11 percent, should the firm accept this project? No O Yes What is the NPV of the project if the required return is 24 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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Consider the two mutually exclusive projects that follow. EOY 0 1 2 3 Project A -10000 5125 5125 5125 4450 Project B -8500 4450 4450 The firm's MARR is 10% per year Select the CORRECT statement: O a. The PW of project A is equal to that of project B O b. The PW of project A is smaller than that of project B O c. The IRR of project B is larger than that of project A O d. The IRR of project A is larger than that of project B
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