Question

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

Answer #1

Ans a. 1.06

the profitability index of project B is 1.06

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...

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
Which of the following statements is true concerning projects A
and B?
a) Due to time disparity, IRR indicates that project A should...

Consider the following cash flows for two mutually exclusive
capital investment projects. The required rate of return is 15%.
Use this
Year Project A
Cash Flow Project B
Cash Flow
0 -$40,000 -$30,000
1 12,000 9,000
2 12,000 9,000
3 12,000 9,000
4 10,800
8,100
5 10,800 8,100
6 5,400
8,100
7. What is the profitability index of project B?
a) 1.03
b) 1.06
c) .94
d) 1.09
e) 1.117
8. Calculate the net present value of project A.
a) $1,564.25
b) $1,227.71
c) $3,802
d) $2,709,21
e) $331.40

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,...

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?

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 ...

1.
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 Cash Flow
?20,000
10,000
30,000
1,000
Project B Cash Flow
?30,000
10,000
20,000
50,000
Use the MIRR decision rule to evaluate...

Problem Two You are considering two mutually exclusive projects
with the following cash flows: (Please show calculations)
Project C/F0 C/F1 C/F2 C/F3 C/F4 C/F5 C/F6
A $(41,215) $12,500 $14,000 $16,500 $18,000 $20,000 N/A
B $(46,775) $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
A)Assuming that the discount rate for project A is 16% and the
discount rate for B is 15%, then given that these are mutually
exclusive projects, which project would you take and why?
B) If you are one of...

Problem Two You are considering two mutually exclusive projects
with the following cash flows:
Project C/F0 C/F1 C/F2 C/F3 C/F4 C/F5 C/F6
A $(41,215) $12,500 $14,000 $16,500 $18,000 $20,000 N/A
B $(46,775) $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
A) Assuming that the discount rate for project A is 16% and the
discount rate for B is 15%, then given that these are mutually
exclusive projects, which project would you take and why?
B) If you are one of the management...

A company is considering two mutually exclusive projects, the
company’s required return is 8 percent and they do not have any
capital constraints. Based on the profitability index, what is your
recommendation concerning these projects? Project A Project B Year
Cash Flow Year Cash Flow 0 -$38,500 0 -$42,000 1 $20,000 1 $10,000
2 $24,000 2 $40,000

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 8 minutes ago

asked 14 minutes ago

asked 28 minutes ago

asked 41 minutes ago

asked 54 minutes ago

asked 54 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago