Calculate the net present value (NPV) and internal rate of return (IRR) for given plan using excel and identify the plan that the company should pursue.

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Answer 1

Question

Chapter 26, Problem 38BP

1.

To determine

Calculate the net present value (NPV) and internal rate of return (IRR) for given plan using excel and identify the plan that the company should pursue.

2.

To determine

Explain the relationship between net present value and internal rate of return and identify the expected value of each plan based on the relationship between net present value and internal rate of return.

3.

To determine

Calculate the new net present value and internal rate of return if company can invest the initial cost of $6,500,000 for both plans, and identify the plan which company should pursue.

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A company is considering three alternative investment projects with different net cash flows. The present value of net cash flows is calculated using Excel and the results follow. Potential Projects Present value of net cash flows (excluding initial investment) Initial investment Project A $ 11,226 (10,000) Project B $ 10,568 (10,000) a. Compute the net present value of each project. b. If the company accepts all positive net present value projects, which of these will it accept? c. If the company can choose only one project, which will it choose on the basis of net present value? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the net present value of each project. Potential Projects Project A Project B Project C Present value of net cash flows Initial investment Net present value $ $ $

Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. 1. Compute the profitability index for each project. 2. Based on the profitability index, which project should the company prefer? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. Project 1 Project 2 Choose Numerator: Profitability Index T 7 Choose Denominator: 4 of 5 180 # Next > G O

Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $420,000 and has a present value of all its cash flows of $1,350,000. Project 2 requires an initial investment of $5 million and has a present value of all its cash flows of $6 million. (a) Compute the profitability index for each project.(b) Based on the profitability index, which project should the company select?

Answer 2

Question

Chapter 26, Problem 38BP

1.

To determine

Calculate the net present value (NPV) and internal rate of return (IRR) for given plan using excel and identify the plan that the company should pursue.

2.

To determine

Explain the relationship between net present value and internal rate of return and identify the expected value of each plan based on the relationship between net present value and internal rate of return.

3.

To determine

Calculate the new net present value and internal rate of return if company can invest the initial cost of $6,500,000 for both plans, and identify the plan which company should pursue.

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Answer 3

Question

Chapter 26, Problem 38BP

1.

To determine

Calculate the net present value (NPV) and internal rate of return (IRR) for given plan using excel and identify the plan that the company should pursue.

2.

To determine

Explain the relationship between net present value and internal rate of return and identify the expected value of each plan based on the relationship between net present value and internal rate of return.

3.

To determine

Calculate the new net present value and internal rate of return if company can invest the initial cost of $6,500,000 for both plans, and identify the plan which company should pursue.

Expert Solution & Answer

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Answer 4

Question

Chapter 26, Problem 38BP

1.

To determine

Calculate the net present value (NPV) and internal rate of return (IRR) for given plan using excel and identify the plan that the company should pursue.

2.

To determine

Explain the relationship between net present value and internal rate of return and identify the expected value of each plan based on the relationship between net present value and internal rate of return.

3.

To determine

Calculate the new net present value and internal rate of return if company can invest the initial cost of $6,500,000 for both plans, and identify the plan which company should pursue.

Expert Solution & Answer

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Answer 5

Chapter 26, Problem 38BP

1.

To determine

Calculate the net present value (NPV) and internal rate of return (IRR) for given plan using excel and identify the plan that the company should pursue.

2.

To determine

Explain the relationship between net present value and internal rate of return and identify the expected value of each plan based on the relationship between net present value and internal rate of return.

3.

To determine

Calculate the new net present value and internal rate of return if company can invest the initial cost of $6,500,000 for both plans, and identify the plan which company should pursue.

Answer 6

Chapter 26, Problem 38BP

1.

To determine

Calculate the net present value (NPV) and internal rate of return (IRR) for given plan using excel and identify the plan that the company should pursue.

Answer 7

Chapter 26, Problem 38BP

1.

To determine

Calculate the net present value (NPV) and internal rate of return (IRR) for given plan using excel and identify the plan that the company should pursue.

Answer 8

2.

To determine

Explain the relationship between net present value and internal rate of return and identify the expected value of each plan based on the relationship between net present value and internal rate of return.

Answer 9

2.

To determine

Explain the relationship between net present value and internal rate of return and identify the expected value of each plan based on the relationship between net present value and internal rate of return.

Answer 10

3.

To determine

Calculate the new net present value and internal rate of return if company can invest the initial cost of $6,500,000 for both plans, and identify the plan which company should pursue.

Answer 11

3.

To determine

Calculate the new net present value and internal rate of return if company can invest the initial cost of $6,500,000 for both plans, and identify the plan which company should pursue.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 26 - Match the following business activities to the...Ch. 26 - Match the following business activities to the...Ch. 26 - Prob. 3TI Ch. 26 - Prob. 4TI Ch. 26 - Prob. 5TI Ch. 26 - Match the following business activities to the...Ch. 26 - Prob. 7TI Ch. 26 - Prob. 8TI Ch. 26 - Prob. 9TI Ch. 26 - Based on your answers to the above questions,...

Calculate the net present value (NPV) and internal rate of return (IRR) for given plan using excel and identify the plan that the company should pursue.

Solution Summary: The author explains how to calculate the net present value (NVP) and internal rate of return (IRR) for a given plan using excel.

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Calculate the net present value (NPV) and internal rate of return (IRR) for given plan using excel and identify the plan that the company should pursue.

Explain the relationship between net present value and internal rate of return and identify the expected value of each plan based on the relationship between net present value and internal rate of return.

Calculate the new net present value and internal rate of return if company can invest the initial cost of $6,500,000 for both plans, and identify the plan which company should pursue.

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Chapter 26 Solutions