Question

- Two projects being considered are mutually exclusive and have the following cash flows:

Year |
Project A |
Project B |

0 |
-$50,000 |
-$50,000 |

1 |
15,000 |
0 |

2 |
15,000 |
0 |

3 |
15,000 |
0 |

4 |
15,000 |
0 |

5 |
15,000 |
99,000 |

If the required rate of return on these projects is 10 percent, which would be chosen and why?

Answer #1

Mutually exclusive refers to a set of projects out of which only
one project can be accepted.

We can determine the net present values (NPV) of the projects using
excel as:

So, the NPV of project A is $6861.80 and NPV of project B is
$11471.21.

The project with higher value of NPV should be accepted because
higher value of NPV will increase the shareholders' value by higher
amount.

**Answer: Hence, project B should be
accepted.**

Two projects being considered are mutually exclusive and have
the following cash flows:
Year
Project A
Project B
0
−$50,000
−$50,000
1
15,625
0
2
15,625
0
3
15,625
0
4
15,625
0
5
1,562
89,500
If the required rate of return on these projects is 13 percent,
which would be chosen and why?
a.
Project B because of higher NPV.
b.
Project B because of higher IRR.
c.
Project A because of higher NPV.
d.
Project A because of...

Two projects being considered are mutually exclusive and have
the following cash flows:
Year
Project A
Project B
0
−$50,000
−$50,000
1
15,625
0
2
15,625
0
3
15,625
0
4
15,625
0
5
1,562
89,500
If the required rate of return on these projects is 13 percent,
which would be chosen and why?
a.
Project B because of higher NPV.
b.
Project B because of higher IRR.
c.
Project A because of higher NPV.
d.
Project A because of...

Projects A and B are mutually exclusive and have the following
cash flows:
Year
Project A
Project B
0
-$82,000
-$82,000
1
34,000
0
2
34,000
0
3
34,000
108,000
1. What is the crossover rate?
2. Do we have a conflict in ranking between the NPV and IRR
methods if the required rate of return is 8%?
3. Which project should be accepted if the required rate of
return is 5%?
4. Which project should be accepted if the...

(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.)

Two projects being considered by a firm are mutually exclusive
and have the following projected cash flows:
Year
Project
A
Project B
Cash
Flow
Cash flow
0
(2000)
(2000)
1
0
832
2
0
832
3
0
832
4
3877
832
Based only on the information given,
which of the projects would be preferred and
why?
Mark the correct answer but justify your answer showing your
computations.
a.Project A, because it has...

(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
$(102,000)
$(102,000)
1
30,000
00
2
30,000
00
3
30,000
00
4
30,000
00
5
30,000
210,000
If the appropriate discount rate on these projects is 11
percent, which would be chosen and why?
The NPV of Project B is $nothing.(Round to the nearest
cent.)

Consider the following cash flows for two mutually exclusive
capital investment projects. The required rate of return is 16%.
Use this information for the next 3 questions. Year Project A Cash
Flow Project B Cash Flow 0 ($50,000) ($20,000) 1 15,000 6,000 2
15,000 6,000 3 15,000 6,000 4 13,500 5,400 5 13,500 5,400 6 6,750
5,400 What is the profitability index of project B?
Answers:
a.1.06
b. 1.01
c.1.09
d. 1.03
e. .94

Consider the following
cash flows for two mutually exclusive capital investment projects.
The required rate of return is 16%. Use this information for the
next 3 questions.
Year Project A Cash
Flow Project B Cash
Flow
0
($50,000)
($20,000)
1
15,000
6,000
2
15,000
6,000
3
15,000
6,000
4
13,500
5,400
5
13,500
5,400
6
6,750
5,400
What is the
profitability index of project B?
Group of answer choices
1.09
1.01
.94
1.06
1.03
then calculate the net present...

Projects A and B are mutually exclusive. Project A has cash
flows of −$10,000, $5,100, $3,400, and $4,500 for Years 0 to 3,
respectively. Project B has cash flows of −$10,000, $4,500, $3,400,
and $5,100 for Years 0 to 3, respectively.
B-1 what is the
IRR of project A?
B-2 What is the
IRR of project B?
B-3 Based on
the IRR rule, which project should be accepted and why?
B-4 At what
required rate of...

You've estimated the following cash flows (in $) for two
mutually exclusive projects:
Year
Project A
Project B
0
-5,600
-8,400
1
1,325
1,325
2
2,148
2,148
3
4,193
8,192
The required return for both projects is 8%.
Part 1 : What is the IRR for project A? 3+ Decimals
Part 2 What is the IRR for project B? 3+ Decimals
Part 3 Which project seems better according to the IRR method?
Project A or Project B
Part 4 What...

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