Net present value for project A and project B and selection of the project if they are independent and mutually exclusive. Introduction: Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

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Answer 1

Question

Chapter 9, Problem 16PROB

a)

Summary Introduction

To determine: Net present value for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

b)

Summary Introduction

To determine: Internal rate of return for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Internal rate of return refers to the minimum rate or hurdle rate at which NPV is zero. Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

c)

Summary Introduction

To determine: Discounted Payback period for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Discounted payback period refers to the payback period which accounts for discounted cash flows. It overcomes the drawback of traditional payback period method where present value factor is ignored.

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Answer 2

Question

Chapter 9, Problem 16PROB

a)

Summary Introduction

To determine: Net present value for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

b)

Summary Introduction

To determine: Internal rate of return for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Internal rate of return refers to the minimum rate or hurdle rate at which NPV is zero. Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

c)

Summary Introduction

To determine: Discounted Payback period for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Discounted payback period refers to the payback period which accounts for discounted cash flows. It overcomes the drawback of traditional payback period method where present value factor is ignored.

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Answer 3

Question

Chapter 9, Problem 16PROB

a)

Summary Introduction

To determine: Net present value for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

b)

Summary Introduction

To determine: Internal rate of return for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Internal rate of return refers to the minimum rate or hurdle rate at which NPV is zero. Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

c)

Summary Introduction

To determine: Discounted Payback period for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Discounted payback period refers to the payback period which accounts for discounted cash flows. It overcomes the drawback of traditional payback period method where present value factor is ignored.

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Answer 4

Question

Chapter 9, Problem 16PROB

a)

Summary Introduction

To determine: Net present value for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

b)

Summary Introduction

To determine: Internal rate of return for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Internal rate of return refers to the minimum rate or hurdle rate at which NPV is zero. Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

c)

Summary Introduction

To determine: Discounted Payback period for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Discounted payback period refers to the payback period which accounts for discounted cash flows. It overcomes the drawback of traditional payback period method where present value factor is ignored.

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Answer 5

Chapter 9, Problem 16PROB

a)

Summary Introduction

To determine: Net present value for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

b)

Summary Introduction

To determine: Internal rate of return for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Internal rate of return refers to the minimum rate or hurdle rate at which NPV is zero. Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

c)

Summary Introduction

To determine: Discounted Payback period for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Discounted payback period refers to the payback period which accounts for discounted cash flows. It overcomes the drawback of traditional payback period method where present value factor is ignored.

Answer 6

Chapter 9, Problem 16PROB

a)

Summary Introduction

To determine: Net present value for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

Answer 7

Chapter 9, Problem 16PROB

a)

Summary Introduction

To determine: Net present value for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

Answer 8

b)

Summary Introduction

To determine: Internal rate of return for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Internal rate of return refers to the minimum rate or hurdle rate at which NPV is zero. Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

Answer 9

b)

Summary Introduction

To determine: Internal rate of return for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Internal rate of return refers to the minimum rate or hurdle rate at which NPV is zero. Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

Answer 10

c)

Summary Introduction

To determine: Discounted Payback period for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Discounted payback period refers to the payback period which accounts for discounted cash flows. It overcomes the drawback of traditional payback period method where present value factor is ignored.

Answer 11

c)

Summary Introduction

To determine: Discounted Payback period for project A and project B and selection of the project if they are independent and mutually exclusive.

Introduction: Discounted payback period refers to the payback period which accounts for discounted cash flows. It overcomes the drawback of traditional payback period method where present value factor is ignored.

Answer 12

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Answer 15

Ch. 9 - Prob. 1PROB Ch. 9 - Prob. 2PROB Ch. 9 - Prob. 3PROB Ch. 9 - Prob. 4PROB Ch. 9 - Prob. 5PROB Ch. 9 - Prob. 6PROB Ch. 9 - Prob. 7PROB Ch. 9 - Prob. 8PROB Ch. 9 - Prob. 9PROB Ch. 9 - Prob. 10PROB

Net present value for project A and project B and selection of the project if they are independent and mutually exclusive. Introduction: Net present value refers to the difference between the present value of cash inflows and the present value of cash outflows based on the discounted rate.

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Chapter 9 Solutions