Question

Gore Global is considering the two mutually exclusive projects below. The cash flows from the projects...

Gore Global is considering the two mutually exclusive projects below. The cash flows from the projects are summarized below.

Year

ManBearPig Project Cash Flow

Flying Car Cash Flow

0

-$100,000   

-$200,000   

1

25,000

50,000

2

25,000

50,000

3

50,000

80,000

4

50,000

100,000


The two projects have the same risk. At what cost of capital would the two projects have the same net present value (NPV)?

A.

10.03%
B.

-24.45%
C.

2.86%
D.

13.04%
E.

15.90%
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Gore Global is considering the two mutually exclusive projects below. The cash flows from the projects...
Gore Global is considering the two mutually exclusive projects below. The cash flows from the projects are summarized below. Year ManBearPig Project Cash Flow Flying Car Cash Flow 0 -$100,000 -$200,000 1 25,000 50,000 2 25,000 50,000 3 50,000 80,000 4 50,000 100,000 What is the ManBearPig’s internal rate of return (IRR) at a 12% cost of capital? A. 12.7% B. 10.0% C. 14.6% D. 13.0% E. 15.9% Reddington Enterprises is considering the two capital budeting projects with the following...
Dorati Inc. is considering two mutually exclusive projects.  Dorati used a 15% required rate of return to...
Dorati Inc. is considering two mutually exclusive projects.  Dorati used a 15% required rate of return to evaluate capital expenditure projects.  If the two projects have the costs and cash flows shown below, determine the NPV for each. Year                             Project S                                   Project T    0                                -$70,000                                   -$100,000    1                                  $50,000                                      $60,000    2                                  $60,000                                      $70,000    3                                                                                    $80,000                        4                                                                                    $90,000
You are considering the following two mutually exclusive projects with the following cash flows:                           &nbsp
You are considering the following two mutually exclusive projects with the following cash flows:                                                                                  Project A                                  Project B                                                             Year    Cash Flow                   Year    Cash Flow                                                             0          -$75,000                         0       -$70,000                                                             1          $19,000                         1       $10,000                                                             2          $48,000                         2       $16,000                                                             3          $12,000                         3       $72,000                        Required rate of return                     10 %                                        13 %                             Calculate the NPV, IRR,...
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below....
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.   Time: 0 1 2 3   Project A Cash Flow -30,000 20,000 40,000 11,000   Project B Cash Flow -40,000 20,000 30,000 60,000 Use the NPV decision rule to evaluate these...
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below....
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 9 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.   Time: 0 1 2 3   Project A Cash Flow -21,000 11,000 31,000 2,000   Project B Cash Flow -31,000 11,000 21,000 51,000 Use the NPV decision rule to evaluate these...
Kilroy, Inc. is considering two mutually exclusive projects. The cash flows of the projects are as...
Kilroy, Inc. is considering two mutually exclusive projects. The cash flows of the projects are as follows: Year Project A Project B 0 -$2,000,000 -$2,000,000 1 500,000 2 500,000 3 500,000 4 500,000 5 500,000 6 500,000 7 500,000 5,650,000 a. Compute the NPV and IRR for the above two projects, assuming a 13% required rate of return. NPV for project A= b. Discuss any potential conflict in evaluating these candidate projects. c. What decision should be made regarding these...
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below....
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 12 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.   Time: 0 1 2 3   Project A Cash Flow -29,000 19,000 39,000 10,000   Project B Cash Flow -39,000 19,000 29,000 59,000 Use the PI decision rule to evaluate these...
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as...
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 8 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and three years, respectively. Time 0 1 2 3 Project A Cashflow -20,000 10,000 30,000 1,000 Project B Cashflow -30,000 10,000 20,000 50,000 Calculate the NPV and use the NPV decision rule to...
Suppose you have two mutually exclusive projects. Project ABACUS has small cash flows that occur over...
Suppose you have two mutually exclusive projects. Project ABACUS has small cash flows that occur over the next six years. Project CHEWY has no cash flow for 5 years, and 1 very large cash flow in year 6. Why is NPV the best choice for comparing these two projects?
(Mutually exclusive projects and​ NPV)  You have been assigned the task of evaluating two mutually exclusive...
(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.)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT