Question

Cullumber Crafts Corp. management is evaluating two independent capital projects that will each cost the company $290,000. The two projects will provide the following cash flows: Year Project A Project B 1 $84,750 $66,000 2 103,450 99,000 3 24,235 137,250 4 129,655 98,110 Collapse question part (a1) What is the payback period of both projects? (Round answers to 2 decimal places, e.g. 15.25.)

Answer #1

Crane Corp. management is evaluating two mutually exclusive
projects. The cost of capital is 15 percent. Costs and cash flows
for each project are given in the following table.
Year
Project 1
Project 2
0
-$1,304,168
-$1,325,262
1
264,000
379,000
2
365,000
379,000
3
445,000
379,000
4
539,000
379,000
5
739,000
379,000
Calculate NPV and IRR of two projects. (Enter negative
amounts using negative sign, e.g. -45.25. Do not round discount
factors. Round other intermediate calculations and final answer to...

Crane Corp. management is evaluating two mutually exclusive
projects. The cost of capital is 15 percent. Costs and cash flows
for each project are given in the following table.
Year
Project 1
Project 2
0
-$1,292,224
-$1,321,796
1
238,000
384,000
2
329,000
384,000
3
430,000
384,000
4
504,000
384,000
5
800,000
384,000
Calculate NPV and IRR of two projects. (Enter negative
amounts using negative sign, e.g. -45.25. Do not round discount
factors. Round other intermediate calculations and final answer to...

Management of Crane Measures, Inc., is evaluating two
independent projects. The company uses a 12.62 percent discount
rate for such projects. The costs and cash flows for the projects
are shown in the following table. Year Project 1 Project 2 0 -
$8,066,549 - $11,655,500 1 3,003,590 2,165,830 2 1,608,490
3,783,590 3 1,465,800 2,820,680 4 1,061,800 4,040,500 5 1,153,880
4,449,580 6 1,708,040 7 1,266,990 a. What are the IRRs for the
projects? (Round final answer to 2 decimal places, e.g....

Timeline Manufacturing Co. is evaluating two projects. The
company uses payback criteria of three years or less. Project A has
a cost of $845,140, and project B’s cost is $1,190,400. Cash flows
from both projects are given in the following table.
Year
Project A
Project B
1
$86,212
$586,212
2
313,562
413,277
3
427,594
231,199
4
285,552
What are their discounted payback periods? (Round
answers to 2 decimal places, e.g. 15.25. If discounted payback
period exceeds life of the project,...

A firm with a cost of capital of 10% is evaluating two
independent projects utilizing the internal rate of return
technique. Project X has an initial investment of $70,000 and cash
inflows at the end of each of the next five years of $25,000.
Project Z has an initial investment of $120,000 and cash inflows at
the end of each of the next four years of $35,000. The firm should
________.
accept Project X and reject project Z
accept both...

Cullumber Incorporated management is considering investing in
two alternative production systems. The systems are mutually
exclusive, and the cost of the new equipment and the resulting cash
flows are shown in the accompanying table. The firm uses a 9
percent discount rate for their production systems.
Year
System 1
System 2
0
-$15,100
-$42,300
1
15,100
30,800
2
15,100
30,800
3
15,100
30,800
What are the payback periods for production systems 1 and 2?
(Round answers to 2 decimal places,...

A company is evaluating two independent projects for capital
investment purposes. If the company has only $85 million to invest,
and its required return is 10 percent by how much the company’s
value will increase? All values are in millions. Project 1 Project
2 0 -50 -50 1 5 0 2 15 0 3 30 0 4 30 90

You will be evaluating three projects for Hasbro Toys. Hasbro's
cost of capital or discount rate is 10%.
The first project (A) will cost $25,000 initially. The project
will then return cash flows of $8,000 for 4 years.
The second project (B) will cost $40,000 initially. The project
will then return cash flows of $15,000 for the next 2 years and
$10,000 for 2 years after that.
The third project (C) will cost $30,000 initially. The project
will then return...

A company is evaluating two independent projects for capital
investment purposes. If the company has only $85 million to invest,
and its required return is 10 percent by how much the company’s
value will increase?
All values are in millions.
Project 1
Project 2
0
-50
-50
1
5
0
2
15
0
3
30
0
4
30
90
$30.53
$11.47
$9.97
$21.44
$19.06

As the director of capital budgeting for Denver Corp., you are
evaluating two mutually exclusive projects with the following net
cash flows:
Project
X Project
Z
Year Cash
Flow Cash
Flow
0 -$100,000 -$100,000
1 50,000 10,000
2 40,000 30,000
3 30,000 40,000
4 10,000 60,000
If Denver’s cost of capital is 15 percent, which project would you
choose?
Neither project.
Project X, since it has the higher IRR.
Project Z, since it has the higher NPV.
Project X, since it has the higher NPV.
Project Z, since it has the higher IRR....

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