Question

The Walk-Up Window is considering two mutually exclusive
projects. Project A has an initial cost of $64,230 and annual cash
flows of $25,200 for three years. Project B has an initial cost of
$45,400 and annual cash flows of $21,400, $21,900, and $10,200 for
Years 1 to 3, respectively. What is the incremental
IRR_{A–B}? Which project should be accepted if the discount
rate is 9 percent? Which project should be accepted if the discount
rate is 6 percent?

Answer #1

Projects A and B are mutually exclusive and both have an initial
cost of $88,000. Project A has annual cash flows for three years of
$18,300, $34,500, and $52,300, respectively. Project B has annual
cash flows for three years of $26,400, $30,900, and $43,700. What
is the crossover rate?
Select one:
a.
27.63 percent
b.
25.30 percent
c.
18.32 percent
d.
13.33 percent
e.
9.74 percent

Two mutually exclusive projects have an initial cost of $12,000.
Project A produces cash inflows of $10,200, $8,700, and $3,500 for
years 1 through 3 respectively. Project B produces cash inflows of
$6,700, $3,500, and $12,600 for years 1 through 3 respectively. The
required rate is 10 percent. which project would you choose to
invest in and why?

Project X and Project Y are two mutually exclusive projects.
Project X requires an initial outlay of $38,000 and generates a net
cash flow of $14,000 per year for six years. Project Y requires an
initial outlay of $52,000, and will generate cash flows of $15,300
per year for eight years. Which project should be chosen and why?
(Assume that the discount rate for both projects is 10
percent).
A. Project X because Project X has
a larger NPV than Project...

Benton Exploration Company is considering two mutually exclusive
projects. Project A has a cost of $10,000 and is expected to
generate net cash flows of $4,000 per year for 5 years. Project B
has a cost of $25,000 and is expected to generate net cash flows of
$9,000 per years for 5 years. Benton's cost of capital is 15
percent.
Based on the net present value (NPV) method, which project
should be undertaken?
Group of answer choices
Project A
Project...

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%

Two mutually exclusive projects have an initial cost of $60,000
each. Project A produces cash inflows of $30,000, $37,000, and
$20,000 for Years 1 through 3, respectively. Project B produces
cash inflows of $80,000 in Year 2 only. The required rate of return
is 10 percent for Project A and 11 percent for Project B. Which
project(s) should be accepted and why?
Project A, because it has the higher required rate of
return.
Project A, because it has the larger...

Project Brady and Project Grey are two mutually exclusive
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sticks designed to stop hot coffee spilling from your takeaway
coffee cup. Both projects commence with an initial up-front cash
inflow followed in future years by a series of annual cash
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The Meacham Tire Company is considering two mutually exclusive
projects with useful lives of 3 and 6 years. The after-tax cash
flows for projects S and L are listed below.
Year
Cash Flow S
Cash Flow L
0
-$60,000
-$115,000
1
38,000
28,500
2
25,000
49,500
3
35,000
26,850
4
22,600
5
18,750
6
23,500
The required rate of return on these
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project should be accepted, if indeed any project...

The Meacham Tire Company is considering two mutually exclusive
projects with useful lives of 3 and 6 years. The after-tax cash
flows for projects S and L are listed below.
Year
Cash Flow S
Cash Flow L
0
-$60,000
-$115,000
1
38,000
28,500
2
25,000
49,500
3
35,000
26,850
4
22,600
5
18,750
6
23,500
The required rate of return on these
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Marigold Company is considering two different, mutually
exclusive capital expenditure proposals. Project A will cost
$464,000, has an expected useful life of 12 years, a salvage value
of zero, and is expected to increase net annual cash flows by
$68,100. Project B will cost $342,000, has an expected useful life
of 12 years, a salvage value of zero, and is expected to increase
net annual cash flows by $50,900. A discount rate of 8% is
appropriate for both projects. Click...

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