Question

You are considering two independent projects both of which have been assigned a discount rate of 15% percent. Based on the project NPV, what is your recommendation concerning these projects?

Project A | Project B | |||

Year | Cash Flow | Year | Cash Flow | |

0 | -$40,000 | 0 | -$51,173 | |

1 | $35,000 | 1 | $18,400 | |

2 | $27,000 | 2 | $14,750 |

You should accept both projects. |
||

You should reject both projects. |
||

You should accept project B and reject project A. |
||

You should accept project A and reject project B. |
||

You should accept project A and be indifferent to project B. |

Answer #1

You are considering two independent projects both of which have
been assigned a discount rate of 11.5% percent. Based on the
project NPV, what is your recommendation concerning these
projects?
Project A
Year
Cash Flow
0
-$91,850
1
$28,405
2
$64,890
Project B
Year
Cash Flows
0
-$45,000
1
$38,500
2
$17,325
Select one:
a. You should reject both projects.
b. You should accept project A and reject project B.
c. You should accept project B and reject project A....

11. You are considering two independent projects
both of which have been assigned a discount rate of 15 percent.
Based on the NPV rule, what is your recommendation concerning these
projects?
(a) You should accept both projects.
(b) You should reject both projects.
(c) You should accept project A and reject project B.
(d) You should accept project B and reject project A.
(e) None of the above is correct.
12. New Labs just announced that it has...

Anne is considering two independent projects with 2-year lives.
Both projects have been assigned a discount rate of 13 percent. She
has sufficient funds to finance one or both projects. Project A
costs $38,500 and has cash flows of $19,400 and $28,700 for Years 1
and 2, respectively. Project B costs $41,000, and has cash flows of
$25,000 and $22,000 for Years 1 and 2, respectively. Which project,
or projects, if either, should you accept based on the
profitability index...

You are considering two independent projects with the following
cash flows. The required return for both projects is 10%. Given
this information, which one of the following statements is
correct?
Year Project A Project B
0 -950,000 -125,000
1 330,000
55,000
2 400,000
50,000
3 450,000
50,000
You should accept project B because it has the higher IRR and
reject project A
You should accept project A because it has the higher NPV and
you can not accept both projects
You should accept...

You are considering two independent projects. The required rate
of return is 13.75 percent for Project A and 14.25 percent for
Project B. Project A has an initial cost of $51,400 and cash
inflows of $21,400, $24,900, and $22,200 for Years 1 to 3,
respectively. Project B has an initial cost of $38,300 and cash
inflows of $18,000 a year for 3 years. Which project(s), if any,
should you accept?
A.
Reject both Projects.
B.
Accept both projects.
C.
Accept...

You are considering two mutually exclusive projects that have
been assigned the same discount rate of 10.5 percent. Project A has
an initial cost of $54,500, and should produce cash inflows of
$16,400, $28,900, and $31,700 for Years 1 to 3, respectively.
Project B has an initial cost of $79,400, and should produce cash
inflows of $0, $48,300, and $42,100, for Years 1 to 3,
respectively. What is the incremental IRR?
7.83%
5.40%
−15.40%
-4.67%
13.89%

You are considering the following two mutually
exclusive projects. Both projects will be depreciated using
straight-line depreciation to a zero book value over the life of
the project. Neither project has any salvage
value.
Project A
Year
Cash Flow
0
-$75,000
1
$19,000
2
$48,000
3
$12,000
Project B
Year
Cash Flow
0
-$70,000
1
$10,000
2
$16,000
3
$72, 000
Required rate of return 10% 13%
Required payback period 2.0 years 2.0 years
Based on the net present value...

(Mutually exclusive projects and NPV) You have been assigned
the task of evaluating two mutually exclusive projects with the
following projected cash flows:
Year
Project A
Cash Flow
Project B
Cash Flow
0
$(90,000)
$(90,000)
1
32,000
0
2
32,000
0
3
32,000
0
4
32,000
0
5
32,000
240,000
If the appropriate discount rate on these projects is 9
percent, which would be chosen and why?
The NPV of Project A is $ _______. (Round to the nearest
cent.)

You are considering two mutually exclusive projects. Based upon
risk, the appropriate discount rate for both projects is 10%. The
first project has an IRR of 22% and an NPV of $22,432. The second
project has an IRR of 12% and an NPV of $24,456. Which project
should you select?
accept both projects since both are acceptable.
pick the project with the shorter payback period.
choose the project with the higher NPV.
unable to determine due to insufficient information.
choose...

You are analyzing the following two mutually exclusive projects
and have developed the following information. Please calculate the
IRRs for the two projects and the crossover rate. Which project
should you accept if the cost of capital is 5%, and which project
should you accept if the cost of capital is 10%?
Year Project A Cash Flow Project B
Cash Flow
0 -$84,500 -$76,900
1 $29,000 $25,000
2 $40,000 $35,000
3 $27,000 $26,000
IRR A: ___________
IRR B: ___________
Crossover...

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