The NPV of each project and determine whether the project is acceptable. Introduction: Net present value : NPV refers to the discounted value of the future cash flows at present. The company should accept the project even if NPV is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

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Answer 1

Question

Chapter 12, Problem 12.3P

a)

Summary Introduction

To determine: The NPV of each project and determine whether the project is acceptable.

Introduction:

Net present value:

NPV refers to the discounted value of the future cash flows at present. The company should accept the project even if NPV is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

b)

Summary Introduction

To determine: The breakeven cash inflow of the each project.

c)

Summary Introduction

To determine: The probability of each project that will achieve at least the breakeven cash inflow.

d)

Summary Introduction

To discuss: The project that is more risky and project that has higher NPV.

e)

Summary Introduction

To discuss: The Person X recommendation when the company minimizes its losses.

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Answer 2

Question

Chapter 12, Problem 12.3P

a)

Summary Introduction

To determine: The NPV of each project and determine whether the project is acceptable.

Introduction:

Net present value:

NPV refers to the discounted value of the future cash flows at present. The company should accept the project even if NPV is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

b)

Summary Introduction

To determine: The breakeven cash inflow of the each project.

c)

Summary Introduction

To determine: The probability of each project that will achieve at least the breakeven cash inflow.

d)

Summary Introduction

To discuss: The project that is more risky and project that has higher NPV.

e)

Summary Introduction

To discuss: The Person X recommendation when the company minimizes its losses.

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Answer 3

Question

Chapter 12, Problem 12.3P

a)

Summary Introduction

To determine: The NPV of each project and determine whether the project is acceptable.

Introduction:

Net present value:

NPV refers to the discounted value of the future cash flows at present. The company should accept the project even if NPV is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

b)

Summary Introduction

To determine: The breakeven cash inflow of the each project.

c)

Summary Introduction

To determine: The probability of each project that will achieve at least the breakeven cash inflow.

d)

Summary Introduction

To discuss: The project that is more risky and project that has higher NPV.

e)

Summary Introduction

To discuss: The Person X recommendation when the company minimizes its losses.

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Answer 4

Question

Chapter 12, Problem 12.3P

a)

Summary Introduction

To determine: The NPV of each project and determine whether the project is acceptable.

Introduction:

Net present value:

NPV refers to the discounted value of the future cash flows at present. The company should accept the project even if NPV is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

b)

Summary Introduction

To determine: The breakeven cash inflow of the each project.

c)

Summary Introduction

To determine: The probability of each project that will achieve at least the breakeven cash inflow.

d)

Summary Introduction

To discuss: The project that is more risky and project that has higher NPV.

e)

Summary Introduction

To discuss: The Person X recommendation when the company minimizes its losses.

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Answer 5

Chapter 12, Problem 12.3P

a)

Summary Introduction

To determine: The NPV of each project and determine whether the project is acceptable.

Introduction:

Net present value:

NPV refers to the discounted value of the future cash flows at present. The company should accept the project even if NPV is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

b)

Summary Introduction

To determine: The breakeven cash inflow of the each project.

c)

Summary Introduction

To determine: The probability of each project that will achieve at least the breakeven cash inflow.

d)

Summary Introduction

To discuss: The project that is more risky and project that has higher NPV.

e)

Summary Introduction

To discuss: The Person X recommendation when the company minimizes its losses.

Answer 6

Chapter 12, Problem 12.3P

a)

Summary Introduction

To determine: The NPV of each project and determine whether the project is acceptable.

Introduction:

Net present value:

NPV refers to the discounted value of the future cash flows at present. The company should accept the project even if NPV is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

Answer 7

Chapter 12, Problem 12.3P

a)

Summary Introduction

To determine: The NPV of each project and determine whether the project is acceptable.

Introduction:

Net present value:

NPV refers to the discounted value of the future cash flows at present. The company should accept the project even if NPV is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

Answer 8

b)

Summary Introduction

To determine: The breakeven cash inflow of the each project.

Answer 9

b)

Summary Introduction

To determine: The breakeven cash inflow of the each project.

Answer 10

c)

Summary Introduction

To determine: The probability of each project that will achieve at least the breakeven cash inflow.

Answer 11

c)

Summary Introduction

To determine: The probability of each project that will achieve at least the breakeven cash inflow.

Answer 12

d)

Summary Introduction

To discuss: The project that is more risky and project that has higher NPV.

Answer 13

d)

Summary Introduction

To discuss: The project that is more risky and project that has higher NPV.

Answer 14

e)

Summary Introduction

To discuss: The Person X recommendation when the company minimizes its losses.

Answer 15

e)

Summary Introduction

To discuss: The Person X recommendation when the company minimizes its losses.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 12.1 - Are most mutually exclusive capital budgeting...Ch. 12.2 - Prob. 1FOP Ch. 12.2 - Prob. 12.2RQ Ch. 12.2 - Describe how each of the following behavioral...Ch. 12.3 - Briefly explain how the following items affect the...Ch. 12.4 - Prob. 1FOE Ch. 12.4 - Prob. 2FOE Ch. 12.4 - Describe the basic procedures involved in using...Ch. 12.4 - Explain why a firm whose stock is actively traded...Ch. 12.4 - Prob. 12.8RQ

To determine: The breakeven cash inflow of the each project.

To determine: The probability of each project that will achieve at least the breakeven cash inflow.

To discuss: The project that is more risky and project that has higher NPV.

To discuss: The Person X recommendation when the company minimizes its losses.

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Chapter 12 Solutions