Your division is considering two projects with the following cash flows (in millions):Year13$5$17$10$65%Project A-$25Project B-$20a. What are the projects' NPVs assuming that the WACC is 5%, 10%, and 15%?WACC NPV-A NPV-BWACC10%015%2NPV-A$10$9NPV-Bb. What are the projects' IRRs?c. If the WACC was 10%, ad A and B were mutually exclusive projects, which project wouldyou choose?

Mutually exclusive projects:Mutually exclusive projects are initiatives that cannot be pursued…

Answered: Year Project A Project B 0 -$25 -$20 1…

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Year Project A Project B 0 -$25 -$20 1 $5 $10 2 $10 $9 3 $17 $6

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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Question

Your division is considering two projects with the following cash flows (in millions):
Year
1
3
$5
$17
$10
$6
5%
Project A
-$25
Project B
-$20
a. What are the projects' NPVs assuming that the WACC is 5%, 10%, and 15%?
WACC NPV-A NPV-B
WACC
10%
0
15%
2
NPV-A
$10
$9
NPV-B
b. What are the projects' IRRs?
c. If the WACC was 10%, ad A and B were mutually exclusive projects, which project would
you choose?

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Please provide the Payback period and Discounted Payback Period:
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Homework, Chapter 26 Internal Rate of Return A project is estimated to cost $352,755 and provide annual net cash flows of $81,000 for six years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine the internal rate of return for this project, using the Present Value of an Annuity of $1 at Compound Interest table shown above. %
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QUESTION 14 You have a total of $30,000 to invest in a project and are considering the following three projects: Cash Flows Project A ($30,000) $8,500 Year Project B ($30,000) $19,600 Project C ($30,000) $10,400 1 $9,300 $17,300 $4,500 $10,400 $10,400 3. $10,400 4. $11,200 $4,200 $10,400 $12,300 $2,300 $10,400 If the cost of capital (discount rate) is 10%, which project(s) do you invest in and why? A. Project B- it will pay back the quickest OB. Project C- it generates the greatest cash flow C. Project A-it has the highest accounting rate of return D.Project B-it has the highest net present value E. Project A- it has the highest net present value OF. Project C- it has the highest profitability index
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Question content area top Part 1 (IRR calculation) Determine the IRR on the following projects: a. An initial outlay of $13,000 resulting in a single free cash flow of $17,165 after 9 years b. An initial outlay of $13,000 resulting in a single free cash flow of $46,394 after 15 years c. An initial outlay of $13,000 resulting in a single free cash flow of $105,001after 25 years d. An initial outlay of $13,000 resulting in a single free cash flow of $13,653 after 4 years
Problem 10.32 Jekyll & Hyde Corp. is evaluating two mutually exclusive projects. The cost of capital is 15 percent. Costs and cash flows are given in the following table. Year Project 1 Project 2 -$1,276,369 -$1,164,680 1 270,450 338.030 2 348,460 338,030 471,960 338,030 506,200 338,030 5 729,300 338,030 Calculate NPV and IRR of two projects. (Enter negative amounts using negative sign, e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25 or 12.25%.) NPV of project 1 is $ NPV of project 2 is $ IRR of project 1 is IRR of project 2 is % Which project should be accepted? Jekyll and Hyde Corp. should accept neither project project 1 project 2 Click if you would like to Show W ion: Open Show Work
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