Question

Following is information on two alternative investments being
considered by Tiger Co. The company requires a 7% return from its
investments.

Project X1 | Project X2 | |||||||||

Initial investment | $ | (126,000 | ) | $ | (212,000 | ) | ||||

Expected net cash flows in: | ||||||||||

Year 1 | 48,000 | 94,500 | ||||||||

Year 2 | 58,500 | 84,500 | ||||||||

Year 3 | 83,500 | 74,500 | ||||||||

Compute the internal rate of return for each of the projects using
Excel functions. Based on internal rate of return, indicate whether
each project is acceptable. **(Round your answers to 2
decimal places.)**

Answer #1

Following is information on two alternative investments being
considered by Tiger Co. The company requires a 9% return from its
investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use
appropriate factor(s) from the tables provided.)
Project X1
Project X2
Initial
investment
$
(80,000
)
$
(123,000
)
Expected net
cash flows in:
Year 1
28,000
64,500
Year 2
38,500
54,500
Year 3
63,500
44,500
a. Compute each project’s net present
value.
b. Compute each...

Following is information on two alternative investments being
considered by Tiger Co. The company requires a 7% return from its
investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables
provided.)
Project X1
Project X2
Initial investment
$
(106,000
)
$
(172,000
)
Expected net cash flows in:
Year 1
38,000
79,500
Year 2
48,500
69,500
Year 3
73,500
59,500
a. Compute each project’s net present value.
b. Compute each...

Following is information on two alternative investments being
considered by Tiger Co. The company requires a 9% return from its
investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use
appropriate factor(s) from the tables provided.) Project X1 Project
X2 Initial investment $ (96,000 ) $ (141,000 ) Expected net cash
flows in: Year 1 33,000 72,000 Year 2 43,500 62,000 Year 3 68,500
52,000 a. Compute each project’s net present value. b. Compute each...

Following is information on two alternative investments being
considered by Jolee Company. The company requires a 8% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables provided.)
Project A
Project B
Initial investment
$
(190,325
)
$
(156,960
)
Expected net cash flows in
year:
1
37,000
30,000
2
42,000
47,000
3
80,295
52,000
4
79,400
72,000
5
55,000
21,000
a. For each alternative project...

Exercise 24-11 Net present value, profitability index LO P3
Following is information on two alternative investments being
considered by Tiger Co. The company requires a 7% return from its
investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use
appropriate factor(s) from the tables provided.) Project X1 Project
X2 Initial investment $ (86,000 ) $ (132,000 ) Expected net cash
flows in year: 1 28,000 64,500 2 38,500 54,500 3 63,500 44,500 a.
Compute each...

A firm is considering the two mutually exclusive investments
projects. Project Alpha requires an initial outlay of $600 and will
return $160 per year for the next seven years; Project Beta
requires an initial outlay of $1,100 and will return $350 per year
for the next five years. Assuming a 11% required return, calculate
the NPV, Payback Period, and MIRR of each project.
Please help by showing Excel calculations. Thanks!

Exercise 11-10 NPV and profitability index LO P3
Following is information on two alternative investments being
considered by Jolee Company. The company requires a 10% return from
its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables
provided.)
Project A
Project B
Initial investment
$
(176,325
)
$
(150,960
)
Expected net cash flows in
year:
1
37,000
26,000
2
55,000
51,000
3
77,295
53,000
4
93,400
78,000
5...

Two alternative $15,000 investments are being considered. A 10%
discount rate is used because the company never invests at a lower
rate than this. The NPV of Alternative A show a total present value
of $12,400 and Alternative B a total present value of $12,800.
Given this information one should select:
a. neither, until one has used the ARR method to obtain the true
rate of return
b. because it has a higher total present value
c. neither, until the...

Two projects being considered are mutually exclusive and have
the following cash flows:
Year
Project A
Project B
0
-$50,000
-$50,000
1
15,000
0
2
15,000
0
3
15,000
0
4
15,000
0
5
15,000
99,000
If the required rate of return on
these projects is 10 percent, which would be chosen and why?

Most Company has an opportunity to invest in one of two new
projects. Project Y requires a $340,000 investment for new
machinery with a six-year life and no salvage value. Project Z
requires a $340,000 investment for new machinery with a five-year
life and no salvage value. The two projects yield the following
predicted annual results. The company uses straight-line
depreciation, and cash flows occur evenly throughout each year. (PV
of $1, FV of $1, PVA of $1, and FVA...

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