Question

A
firm has a WACC of 8% and is deciding between two mutually
exclusive projects. Project A has an initial investment of $63. The
additional cash flows for project A are: year 1 = $20, year 2 =
$39, year 3 = $67. Project B has an initial investment of $73.The
cash flows for project B are: year 1 = $60, year 2 = $45, year 3 =
$32. Find the Payback and NPV for each project

Answer #1

CF = Cash flow

DF = Discounting factor (8%, n years)

DCF = Discounted cash flow = CF x DF

A firm has a WACC of 8% and is deciding between two mutually
exclusive projects. Project A has an initial investment of $63. The
additional cash flows for project A are: year 1 = $20, year 2 =
$39, year 3 = $67. Project B has an initial investment of $73.The
cash flows for project B are: year 1 = $60, year 2 = $45, year 3 =
$32.
a. What is the payback for project A? (Show your answer...

A firm has a WACC of 11% and is deciding between two mutually
exclusive projects. Project A has an initial investment of $61. The
additional cash flows for project A are: year 1 = $15, year 2 =
$37, year 3 = $67. Project B has an initial investment of $73.The
cash flows for project B are: year 1 = $56, year 2 = $42, year 3 =
$21. Calculate the payback and
NPV for each project. (Show all
answers...

Q2) A firm has a WACC of 8.64% and is deciding between two
mutually exclusive projects. Project A has an initial investment of
$61.55. The additional cash flows for project A are: year 1 =
$19.98, year 2 = $38.47, year 3 = $61.67. Project B has an initial
investment of $72.32. The cash flows for project B are: year 1 =
$59.90, year 2 = $35.62, year 3 = $28.78. Calculate the
Following:
a) Payback Period for Project A:...

[Use the
following information to answer the next 6 questions.]
A firm has a WACC of
8% and is deciding between two mutually exclusive projects. Project
A has an initial investment of $63. The additional cash flows for
project A are: year 1 = $20, year 2 = $39, year 3 = $67. Project B
has an initial investment of $73.The cash flows for project B are:
year 1 = $60, year 2 = $45, year 3 = $32.
a....

Question 1
A company is deciding
among two mutually exclusive projects. Project A’s initial cost is
$40,000, and Project B’s initial cost is 30,000. The two projects
have the following cash flows:
Project
A
Project B
Year
Cash Flow Cash Flow
1
10,000
8,000
2
15,000
12,000
3
20,000
20,000
4
20,000
15,000
The company's weighted
average cost of capital is 11 percent. What is the net present
value (NPV) of the project A?...

CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE
PROJECTS
A firm with a WACC of 10% is considering the following mutually
exclusive projects:
0
1
2
3
4
5
Project 1
-$500
$45
$45
$45
$160
$160
Project 2
-$450
$300
$300
$60
$60
$60
Which project would you recommend?
Select the correct answer.
a. Both Projects 1 and 2, since both projects have NPV's >
0.
b. Project 1, since the NPV1 >
NPV2.
c. Both Projects 1 and 2, since both...

A firm must choose between two mutually exclusive projects, A
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the firm’s cost of capital is 6.00%: Project...

A firm must choose between two mutually exclusive projects, A
& B. Project A has an initial cost of $11000. Its projected net
cash flows are $900, $2000, $3000, $4000, and $5000 at the end of
years 1 through 5, respectively. Project B has an initial cost of
$15000, and its projected net cash flows are $7000, $5000, $3000,
$2000, and $1000 at the end of years 1 through 5, respectively. If
the firm’s cost of capital is 6.00%:
The...

A firm must choose between two mutually exclusive projects, A
& B. Project A has an initial cost of $11000. Its projected net
cash flows are $900, $2000, $3000, $4000, and $5000 at the end of
years 1 through 5, respectively. Project B has an initial cost of
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the firm’s cost of capital is 6.00%:
A....

A firm must choose between two mutually exclusive projects, A
& B. Project A has an initial cost of $10000. Its projected net
cash flows are $800, $2000, $3000, $4000, and $5000 at the end of
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$2000, and $1000 at the end of years 1 through 5, respectively. The
firm’s cost of capital is 6.00%. Choose the...

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