Question

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$40,000...

Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 –$40,000       –$180,000      
1 25,000       15,000      
2 22,000       45,000      
3 20,000       50,000      
4 15,000       275,000      

The required return on these investments is 11 percent.

Required:
(a)

What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Payback period
  Project A years  
  Project B years  
(b)

What is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g.,32.16).)

Net present value
  Project A $     
  Project B $     
(c)

What is the IRR for each project? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Internal rate of return
  Project A %   
  Project B %   
(d)

What is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 3 decimal places (e.g., 32.161).)

Profitability index
  Project A     
  Project B     
(e) Based on your answers in (a) through (d), which project will you finally choose?
  (Click to select)   Project A   Project B
Year Cash Flow
0 –$ 12,000
1 4,500
2 6,000
3 6,600
4 4,800
5 4,100
Requirement 1:
The company uses an interest rate of 16 percent on all of its projects. In the table below, show the modified cash flows and calculate the modified internal rate of return (MIRR) using the "combination" approach. (Do not round intermediate calculations. Negative amounts should be indicated with a minus sign. Round your answers to 2 decimal places (e.g., 32.16).)
Year Combination
Approach
0 $  
1 $  
2 $  
3 $  
4 $  
5 $  
MIRR %

Homework Answers

Answer #1

1)

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0 –$ 341,000 –$ 51,000    1 54,000 24,900    2 74,000 22,900    3 74,000 20,400    4 449,000 15,500    Whichever project you choose, if any, you require a return of 15 percent on your investment.    a-1 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)    a-2...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 424,000 –$ 39,500 1 44,500 20,300 2 61,500 13,400 3 78,500 18,100 4 539,000 14,900    The required return on these investments is 11 percent. a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Payback period Project A years Project B years b. What is the NPV for each...
Consider the following two mutually exclusive projects:     Year Cash Flow (X) Cash Flow (Y) 0...
Consider the following two mutually exclusive projects:     Year Cash Flow (X) Cash Flow (Y) 0 –$ 20,900 –$ 20,900 1 9,075 10,550 2 9,550 8,025 3 9,025 8,925      Calculate the IRR for each project. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)     IRR   Project X %     Project Y %     What is the crossover rate for these two projects? (Do not round intermediate calculations. Enter your answer...
The Bosa Corporation is trying to choose between the following two mutually exclusive design projects: Year...
The Bosa Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 –$66,000 –$ 17,800 1 29,000 9,600 2 29,000 9,600 3 29,000 9,600 a-1 If the required return for both projects is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Profitability Index Project I Project II b-1 What is the NPV...
Garage, Inc., has identified the following two mutually exclusive projects:     Year Cash Flow (A) Cash...
Garage, Inc., has identified the following two mutually exclusive projects:     Year Cash Flow (A) Cash Flow (B) 0 –$ 28,000 –$ 28,000 1 13,400 3,800 2 11,300 9,300 3 8,700 14,200 4 4,600 15,800    a-1 What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)    IRR   Project A %   Project B %    a-2 Using the IRR decision rule, which...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: Year...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 – $ 62,000 – $ 18,200 1 33,000 9,800 2 33,000 9,800 3 33,000 9,800 a-1. If the required return is 12 percent, what is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)    Profitability Index Project I Project II    a-2. If the...
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects:   ...
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects:    Year Cash Flow (I) Cash Flow (II) 0 –$ 71,000 –$ 17,300 1 33,000 9,350 2 33,000 9,350 3 33,000 9,350     a-1 If the required return is 12 percent, what is the profitability index for both projects? (Do not round intermediate calculations. Round your answers to 3 decimal places, e.g., 32.161.)    Profitability Index   Project I      Project II       a-2 If...
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects:   ...
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects:    Year Cash Flow (I) Cash Flow (II) 0 –$ 54,000 –$ 19,000 1 25,000 10,200 2 25,000 10,200 3 25,000 10,200     a-1 If the required return is 11 percent, what is the profitability index for both projects? (Do not round intermediate calculations. Round your answers to 3 decimal places, e.g., 32.161.)    Profitability Index   Project I      Project II       a-2 If...
Consider the following cash flows of two mutually exclusive projects for A–Z Motorcars. Assume the discount...
Consider the following cash flows of two mutually exclusive projects for A–Z Motorcars. Assume the discount rate for both projects is 12 percent. Year AZM Mini-SUV AZF Full-SUV 0 –$ 525,000 –$ 875,000 1 335,000 365,000 2 210,000 450,000 3 165,000 305,000 a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Payback period AZM Mini-SUV years AZF Full-SUV years b. What is the NPV for...
Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the...
Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate for both projects is 11 percent. Year Dry Prepreg Solvent Prepreg 0 –$ 1,740,000 –$ 770,000 1 1,104,000 395,000 2 908,000 640,000 3 754,000 398,000    a. What is the payback period for both projects? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)     b. What is the NPV for both projects? (Do not round intermediate...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT