Question

You've estimated the following cash flows (in $) for two mutually exclusive projects:

Year | Project A | Project B |

0 | -5,600 | -8,400 |

1 | 1,325 | 1,325 |

2 | 2,148 | 2,148 |

3 | 4,193 | 8,192 |

The required return for both projects is 8%.

Part 1 : What is the IRR for project A? 3+ Decimals

Part 2 What is the IRR for project B? 3+ Decimals

Part 3 Which project seems better according to the IRR method? Project A or Project B

Part 4 What is the NPV for project A?

Part 5 What is the NPV for project B?

Which project seems better according to the NPV method? Project A or Project B

Compare the answers to parts 3 and 6. If both projects are mutually exclusive, which one should you accept? Project A or Project B

Answer #1

Intro
You've estimated the following cash flows (in $) for two
mutually exclusive projects:
Year
Project A
Project B
0
-5,500
-8,250
1
1,325
1,325
2
2,148
2,148
3
4,010
7,918
The required return for both projects is 8%.
Attempt 1/10 for 10 pts.
Part 1
What is the IRR for project A?
Submit
Attempt 1/10 for 10 pts.
Part 2
What is the IRR for project B?
Submit
Attempt 1/5 for 10 pts.
Part 3
Which project seems better...

You've estimated the
following cash flows (in $) for two projects:
Year
Project A
Project B
0
-5,100
-7,650
1
1,325
1,325
2
2,148
2,148
3
3,444
6,967
The required return
for both projects is 8%.
What is the NPV for
project A?
What is the NPV for
project B?
Which project seems
better according to the NPV method?
Project A or Project B

You've estimated the
following cash flows (in $) for two projects:
Year
Project A
Project B
0
-5,400
-8,100
1
1,325
1,325
2
2,148
2,148
3
3,942
7,751
The required return
for both projects is 8%.
A:What is the NPV for
project A?
B:What is the NPV for
project B?
C:Which project seems
better according to the NPV method?

You've estimated the following cash flows (in $) for a
project:
A
B
1
Year
Cash flow
2
0
-5,400
3
1
1,325
4
2
2,148
5
3
2,258
Attempt 3/10 for 6 pts.
Part 1
What is the IRR for the project?

NPV verses IRR Consider the following cash flows on the two
mutually exclusive projects for the Bahamas Recreation Corporations
(BRC). Both projects require an annual return on 14%
Year Deep Water Fishing New Submarine Ride
0 -$850,000 -$1,650,000
1 320,000 810,000
2 470,000 750,000
3 410,000 690,000
a) If your decision rile is to accept the project with the
greater IRR, which project should you choose?
c) To be prudent, you compute the NPV for both projects. Which
project should you...

Two projects being considered are mutually exclusive and have
the following cash flows:
Year
Project A
Project B
0
−$50,000
−$50,000
1
15,625
0
2
15,625
0
3
15,625
0
4
15,625
0
5
1,562
89,500
If the required rate of return on these projects is 13 percent,
which would be chosen and why?
a.
Project B because of higher NPV.
b.
Project B because of higher IRR.
c.
Project A because of higher NPV.
d.
Project A because of...

Two projects being considered are mutually exclusive and have
the following cash flows:
Year
Project A
Project B
0
−$50,000
−$50,000
1
15,625
0
2
15,625
0
3
15,625
0
4
15,625
0
5
1,562
89,500
If the required rate of return on these projects is 13 percent,
which would be chosen and why?
a.
Project B because of higher NPV.
b.
Project B because of higher IRR.
c.
Project A because of higher NPV.
d.
Project A because of...

NPV versus IRR Consider the
following cash flows on two mutually exclusive projects for the
Bahamas Recreation Corporation. Both projects require an annual
return of 15 percent.
YEAR
DEEPWATER FISHING
NEW SUBMARINE RIDE
0
−$835,000
−$1,650,000
1
450,000
1,050,000
2
410,000
675,000
3
335,000
520,000
As a financial analyst for the company, you are asked the
following questions.
If your decision rule is to accept the project with the greater
IRR, which project should you choose?
Since you are fully...

If mutually exclusive projects with normal cash flows are being
analyzed, the net present value (NPV) and internal rate of return
(IRR) methods agree.
Projects Y and Z are mutually exclusive projects. Their cash
flows and NPV profiles are shown as follows.
Year
Project Y
Project Z
0
–$1,500
–$1,500
1
$200
$900
2
$400
$600
3
$600
$300
4
$1,000
$200
If the weighted average cost of capital (WACC) for each project
is 14%, do the NPV and...

Consider the following cash flows on two mutually exclusive
projects for the Bahamas Recreation Corporation. Both
projects require an annual return of 15 percent.
As a financial analyst for thecompany, you are asked the
following questions.
a.If your decision rule is to accept the project with the
greater IRR, which project should you choose? Explain why
b. Since you are fully aware of the IRR rule's scale
problem, you calculate the incremental IRR for the cash
flows. Based on your computation, which project...

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