Question

Here are the cash-flow forecasts for two mutually exclusive projects: Cash Flows (dollars) Year Project A...

Here are the cash-flow forecasts for two mutually exclusive projects:

Cash Flows (dollars)
Year Project A Project B
0 120 120
1 50 69
2 70 69
3 90 69

a-1. What is the NPV of each project if the opportunity cost of capital is 2%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

a-2. Which project would you choose?

b-1. What is the NPV of each project if the opportunity cost of capital is 14%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b-2. Which would you choose?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Garage, Inc., has identified the following two mutually exclusive projects:     Year Cash Flow (A) Cash...
Garage, Inc., has identified the following two mutually exclusive projects:     Year Cash Flow (A) Cash Flow (B) 0 –$ 28,000 –$ 28,000 1 13,400 3,800 2 11,300 9,300 3 8,700 14,200 4 4,600 15,800    a-1 What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)    IRR   Project A %   Project B %    a-2 Using the IRR decision rule, which...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0 –$ 341,000 –$ 51,000    1 54,000 24,900    2 74,000 22,900    3 74,000 20,400    4 449,000 15,500    Whichever project you choose, if any, you require a return of 15 percent on your investment.    a-1 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)    a-2...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 424,000 –$ 39,500 1 44,500 20,300 2 61,500 13,400 3 78,500 18,100 4 539,000 14,900    The required return on these investments is 11 percent. a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Payback period Project A years Project B years b. What is the NPV for each...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$40,000...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$40,000       –$180,000       1 25,000       15,000       2 22,000       45,000       3 20,000       50,000       4 15,000       275,000       The required return on these investments is 11 percent. Required: (a) What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Payback period   Project A years     Project B years  ...
Consider the following two mutually exclusive projects:     Year Cash Flow (X) Cash Flow (Y) 0...
Consider the following two mutually exclusive projects:     Year Cash Flow (X) Cash Flow (Y) 0 –$ 20,900 –$ 20,900 1 9,075 10,550 2 9,550 8,025 3 9,025 8,925      Calculate the IRR for each project. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)     IRR   Project X %     Project Y %     What is the crossover rate for these two projects? (Do not round intermediate calculations. Enter your answer...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 18 percent. Year Deepwater Fishing New Submarine Ride 0 ?$ 1,040,000 ?$ 2,030,000 1 460,000 1,080,000 2 582,000 890,000 3 510,000 930,000 a-1. Compute the IRR for both projects. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) IRR Deepwater Fishing % Submarine Ride % a-2. Based on...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 18 percent. Year Deepwater Fishing New Submarine Ride 0 ?$ 1,035,000 ?$ 2,020,000 1 455,000 1,070,000 2 578,000 885,000 3 505,000 920,000 a-1. Compute the IRR for both projects. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) IRR Deepwater Fishing % Submarine Ride % a-2. Based on...
Consider the following projects: Cash Flows ($) Project C0 C1 D –10,900 21,800 E –20,900 36,575...
Consider the following projects: Cash Flows ($) Project C0 C1 D –10,900 21,800 E –20,900 36,575 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 8%. a. Calculate the profitability index for each project. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Project Profitability Index D E b-1. Calculate the profitability-index using the incremental cash flows. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Profitability-index b-2....
Consider the following projects: Cash Flows ($) Project C0 C1 D –11,300 22,600 E –21,300 37,275...
Consider the following projects: Cash Flows ($) Project C0 C1 D –11,300 22,600 E –21,300 37,275 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 9%. a. Calculate the profitability index for each project. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Project Profitability Index D E b-1. Calculate the profitability-index using the incremental cash flows. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Profitability-index b-2....
The following are the cash flows of two projects: Year Project A Project B 0 $...
The following are the cash flows of two projects: Year Project A Project B 0 $ (210 ) $ (210 ) 1 90 110 2 90 110 3 90 110 4 90 a. Calculate the NPV for both projects if the opportunity cost of capital is 17%. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT