Question

A firm needs to decide between two mutually exclusive projects. Project Alpha requires an initial investment of $37,000 today and is expected to generate cash flows of $31,000 for the next 4 years. Project Beta requires an initial investment of $92,000 and is expected to generate cash flows of $36,400 for the next 8 years. The cost of capital is 10%. The projects can be repeated with no change in cash flows. What is the NPV of the project that would be selected based on the replacement chain analysis?

A) Project Alpha; $103,111

B) Project Beta; $103,111

C) Project Alpha; $105,257

D) Project Beta; $102,191

E) Project Alpha; $112,391

Answer #1

A firm needs to decide between two mutually exclusive projects.
Project Alpha requires an initial investment of 50,000 today and is
expected to generate cash flows of 51,000 for the next 3 years.
Project Beta requires an intial investment of 85,000 and is
expected to generate cash flows of 49,700 for the next 6 years. The
cost of capital is 6%. The projects can be repeated with no charge
in cash flows. What is the NPV of the project that...

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Please help by showing Excel calculations. Thanks!

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Project X requires an initial investment of $41,000 today and is
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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

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