Llf Fundamentals Of Financial
15th Edition
ISBN: 9781337395267
Author: Brigham
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 11, Problem 11P
CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS Project S costs $17,000, and its expected cash flows would be $5,000 per year for 5 years. Mutually exclusive Project L costs $30,000, and its expected cash flows would be $8,750 per year for 5 years. If both projects have a WACC of 12%, which project would you recommend? Explain.
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Project S requires an initial outlay at t = 0 of $16,000, and its expected cash flows would be $5,000 per year for 5
years. Mutually exclusive Project L requires an initial outlay at t = 0 of $30,500, and its expected cash flows would be
$9,450 per year for 5 years. If both projects have a WACC of 16%, which project would you recommend?
Select the correct answer.
O a. Project S, because the NPVS > NPVL.
O b. Both Projects S and L, because both projects have NPV's > 0.
c. Both Projects S and L, because both projects have IRR's > 0.
O d. Project L, because the NPVL > NPVS.
O e. Neither Project S nor L, because each project's NPV < 0.
Give typing answer with explanation and conclusion
Project S requires an initial outlay at t = 0 of $13,000, and its expected cash flows would be $5,000 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $28,000, and its expected cash flows would be $13,850 per year for 5 years. If both projects have a WACC of 15%, which project would you recommend?
Select the correct answer.
a. Neither Project S nor L, because each project's NPV < 0.
b. Both Projects S and L, because both projects have NPV's > 0.
c. Project S, because the NPVS > NPVL.
d. Both Projects S and L, because both projects have IRR's > 0.
e. Project L, because the NPVL > NPVS.
Project S requires an initial outlay at t = 0 of $10,000, and its expected cash flows would be $5,000 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $41,500, and its expected cash flows would be $10, 950 per year for 5 years. If both projects have a WACC of 15%, which project would you recommend?
Select the correct answer.
a. Project S, because the NPVS > NPVL.
b. Project L, because the NPVL > NPVS.
c. Neither Project S nor L, because each project's NPV < 0.
d. Both Projects S and L, because both projects have NPV's > 0.
e. Both Projects S and L, because both projects have IRR's > 0.
Chapter 11 Solutions
Llf Fundamentals Of Financial
Ch. 11 - How are project classifications used in the...Ch. 11 - Prob. 2QCh. 11 - Why is the NFV of a relatively long-term project...Ch. 11 - Prob. 4QCh. 11 - If two mutually exclusive projects were being...Ch. 11 - Discuss the following statement: If a firm has...Ch. 11 - Why might it be rational for a small firm that...Ch. 11 - Project X is very risky and has an NPV of 3...Ch. 11 - Prob. 9QCh. 11 - A firm has a 100 million capital budget. It is...
Ch. 11 - NPV Project L costs 65,000, its expected cash...Ch. 11 - IRR Refer to problem 11-1. What is the projects...Ch. 11 - MIRR Refer to problem 11-1. What is the projects...Ch. 11 - Prob. 4PCh. 11 - DISCOUNTED PAYBACK Refer to problem 11-1. What is...Ch. 11 - NPV Your division is considering two projects with...Ch. 11 - CAPITAL BUDGETING CRITERIA A firm with a 14% WACC...Ch. 11 - Prob. 8PCh. 11 - CAPITAL BUDGETING CRITERIA: ETHICAL CONSIDERATIONS...Ch. 11 - CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE...Ch. 11 - CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE...Ch. 11 - Prob. 12PCh. 11 - MIRR A firm is considering two mutually exclusive...Ch. 11 - CHOOSING MANDATORY PROJECTS ON THE BASIS OF LEAST...Ch. 11 - NPV PROFILES: TIMING DIFFERENCES An oil-drilling...Ch. 11 - Prob. 16PCh. 11 - CAPITAL BUDGETING CRITERIA A company has an 11%...Ch. 11 - NPV AND IRR A store has 5 years remaining on its...Ch. 11 - Prob. 19PCh. 11 - NPV A project has annual cash flows of 5,000 for...Ch. 11 - Prob. 21PCh. 11 - MIRR A project has the following cash flows: This...Ch. 11 - CAPITAL BUDGETING CRITERIA Your division is...Ch. 11 - BASICS OF CAPITAL BUDGETING You recently went to...
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