Question

Consider two mutually exclusive projects with the following cash flows: Project A is a 6 year project with initial (time 0) cash outflow of 40,000 and time 1 through 6 cash inflows of 8000,14000,13000,12000,11000,and 10000 respectively. Project B is a 3 year project with initial (time 0) cash outflow of 20,000 and time 1 through 3 cash inflows of 7000,13000, and 12000 respectively. Assuming a 11.5% cost of capital compute the crossover internal rate of return on the incremental cash flows A-B.

Answer #1

Consider two projects with the following cash flows: Project S
is a 4 year project with initial (time 0) cash outflow of 3000 and
time 1 through 4 cash inflows of 1500, 1200, 800 and 300
respectively. Project L is a 4 year project with initial (time 0)
cash outflow of 3000 and time 1 through 4 cash inflows of 400, 900,
1300, and 1500 respectively. Assuming a 5% cost of capital,
determine which project should be chosen if the...

Consider two projects with the following cash flows: Project S
is a 4 year project with initial (time 0) cash outflow of 3000 and
time 1 through 4 cash inflows of 1500, 1200, 800 and 300
respectively. Project L is a 4 year project with initial (time 0)
cash outflow of 3000 and time 1 through 4 cash inflows of 400, 900,
1300, and 1500 respectively. Assuming a 5% cost of capital,
determine which project should be chosen if the...

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...

Two mutually exclusive projects have an initial cost of $12,000.
Project A produces cash inflows of $10,200, $8,700, and $3,500 for
years 1 through 3 respectively. Project B produces cash inflows of
$6,700, $3,500, and $12,600 for years 1 through 3 respectively. The
required rate is 10 percent. which project would you choose to
invest in and why?

"Consider two mutually exclusive projects that will be conducted
for a total of 6 years. Project A lasts 3 years (so it will need to
be repeated 1 time) and has the following cash flow: Year 0
-$22,000; Year 1 $20,000; Year 2 $18,000; Year 3 $11,000. Project B
lasts 2 years (so it will need to be repeated 2 times) and has the
following cash flow: Year 0 -$19,000; Year 1 $19,000; Year 2
$23,000. Assume both projects can...

You are analyzing the following two mutually exclusive projects
and have developed the following information:
Year
Project A Cash Flows
Project B Cash Flows
0
$-86,204
$-77,923
1
$31,304
$25,972
2
$40,882
$34,858
3
$28,853
$25,208
What is the incremental IRR (i.e., crossover rate)? (Answer in
percentage terms and round answer to 2 decimals)

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...

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?

You are considering two mutually exclusive projects with the
following cash flows. Which project would you choose? (The
following is the only information you have. Don’t ask for more
because I don’t have any more information?) Hint: Find the
“crossover rate” to answer. PLEASE SHOW & EXPLAIN ALL WORK
Year
Project A
Project B
0
-240,000
-198,000
1
0
110,800
2
0
82,500
3
325,000
45,000

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...

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