Question

Due to a restricted budget, a company can only undertake one of
the following projects:

**Project X**: This project has an initial investment
of $900,000 and annual profits of $425,000 in year 1, $425,000 in
year 2 and $350,000 in year 3.

**Project Y**: This project has an initial investment
of $900,000 and a profit of $1,000,000 in year 3.

**a.** Calculate the IRR for Project X.

%

**b.** Calculate the IRR for Project Y.

%

**c.** Which project should the company
undertake?

Project X

Project Y

Answer #2

DECISION |

The Company should accept PROJECT-X, since the Project-X has the higher IRR of 16.45% |

answered by: anonymous

Due to a restricted capital budget, a company can undertake only
one of the following three-year projects. Both require an initial
investment of $650,000 and will have no significant terminal value.
Project XXX is anticipated to have annual profits of $400,000,
$300,000, and $200,000 in successive years, whereas Project YYY’s
only profit, $1.05 million, comes at the end of Year 3. a.
Calculate the IRR of each project. b. On the basis of their IRRs,
which project should be selected?

Due to a restricted capital budget, a company can undertake only
one of the following three-year projects. Both require an initial
investment of $650,000 and will have no significant terminal value.
Project XXX is anticipated to have annual profits of $400,000,
$300,000, and $200,000 in successive years, whereas Project YYY’s
only profit, $1.05 million, comes at the end of Year 3. a.
Calculate the IRR of each project.

Company X considers three new projects.
Discount rate is 20%.
You need to analyze these projects
1. Calculate the NPV and IRR of the first new project based on
the below information An initial investment cost: $1,500,000
Salvage value: $200,000 Cash flows 1 $550,000 2 $425,000 3 $325,000
4 $385,000 5 $450,000 6 $500,000
2. Calculate the NPV and IRR of the second new project based on
the information: An initial investment cost is $52,500. The project
generates $8,250 in...

You are trying to determine which of two mutually exclusive
projects to undertake. Project Adam has an initial outlay of
$10,000, an NPV of $4,392.15, an IRR of 11.33%, and an EAA of
$1,158.64. Project Eve has an initial outlay of $15,000, an NPV of
$5,833.73, an IRR of 9.88%, and an EAA of $1,093.50. The cost of
capital for both projects is 9%, and the projects have different
lives. If the projects are repeatable, then:
You should do both...

You are trying to determine which of two mutually exclusive
projects to undertake. Both projects have the same initial outlay.
Project Adam has an NPV of $4,392.15, an IRR of 11.33%, and an EAA
of $1,158.64. Project Eve has an NPV of $5,833.73, an IRR of 9.88%,
and an EAA of $1,093.50. The cost of capital for both projects is
9%, the projects have different lives, and the projects are not
repeatable. What should you do?
You should do Project...

Grey company is analyzing a project that requires an initial
investment of $600,000. The project's expected cash flows are:
(Year 1) $350,000, (Year 2) -$125,000, (Year 3) $500,000 and (Year
4) $400,000.
1. Grey company's WACC is 10%, and the project has the same risk
as the firm's average project. Calculate this project's modified
internal rate of return (MIRR): _______%.
2. If Grey company's managers select projects based on the MIRR
criterion, they should accept or reject this
independent project....

The table below lists the independent projects that your company
is considering to invest:
Project
Initial investment (USD)
NPV (USD)
IRR (%)
A
200000
52131
9.23
B
410000
48192
8.95
C
290000
-24690
7.47
D
320000
75239
9.49
E
510000
51693
9.24
F
260000
68092
9.54
G
220000
49171
9.64
The required return is 8.1 percent. If there is an investment
budget ceiling of $1,000,000, what is the total net present value
of investment opportunuties missed (the sum of NPVs...

The table below lists the independent projects that your company
is considering to invest:
Project Initial investment (USD) NPV
(USD) IRR (%)
A 150000 35803 12.94
B 510000 57040 12.41
C 230000 59392 13.08
D 450000 47742 12.44
E 370000 -34559 10.42
F 110000 32830 13.04
G 510000 143507 12.38
The required return is 11.0 percent. If there is an investment
budget ceiling of $1,000,000, what is the total net present value
of investment opportunuties missed (the sum of NPVs...

A company has a capital budget of $300 and is evaluating the
following projects capital projects. What should the company
do?
Accept projects A and E
Accept projects A and B
Accept project B
Accept projects C, and E
Accept all the projects
Project
Initial Investment ($ millions)
PV(NCF) ($ millions)
A
200
420
B
300
660
C
200
380
D
200
330
E
100
250

Company ABC is planning to undertake project requiring initial
investment of $2,ooo,ooo million and is expected to generate
$500,000 million net cash flow in Year 1, $580,000 in Year 2,
$600,000 in year 3, $690,000 in Year 4 and $950,000 in Year 5.
Calculate the payback value Net present value IRR Present value
index of the project
Rate is 10%

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