Question

Company B’s WACC is 10%. It has three Projects it can choose from: Projects X, Y...

Company B’s WACC is 10%. It has three Projects it can choose from: Projects X, Y and Z. The following information is available regarding Project X.

Years 0 1 2 3
Cash Flows -$100 $80 $60 $40

And the following information is available regarding Projects Y and Z.

Criteria Project Y Project Z
NPV $40 $67
MIRR 10% 20%
IRR 6.5% 18.7%
Regular Payback 2.23 years 1.77 years

1) If IRR for Project X is 17.95%, and the three project X, Y & Z are independent, then based on IRR criteria we choose: *

Project Z

Project X

Projects X and Z

Projects X, Y and Z

None of the projects

2)

Assuming the three projects X, Y & Z are mutually exclusive, based on regular payback period criteria we choose: *

Project X

Project Y

Project Z

All of the projects

None of the projects

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