Question

project s has a pattern of high cash flows in its early life,
while project L has a longer life, with large cash flows late in
its life. neither has negative cash flows after year 0, and at the
current cost of capital, the two projects have identical NPVs. now
suppose interest rates and money costs decline. other things held
constant, this change will cause L to become more preferred to
S

Answer #1

Project S costs $19,000 and its expected cash flows would be
$6,500 per year for 5 years. Mutually exclusive Project L costs
$32,000 and its expected cash flows would be $8,850 per year for 5
years. If both projects have a WACC of 13%, which project would you
recommend? Select the correct answer.
a. Project L, since the NPVL > NPVS.
b. Both Projects S and L, since both projects have NPV's >
0
. c. Both Projects S and...

Project S costs $12,000 and its expected cash flows would be
$5,500 per year for 5 years. Mutually exclusive Project L costs
$26,000 and its expected cash flows would be $11,500 per year for 5
years. If both projects have a WACC of 14%, which project would you
recommend?
Select the correct answer.
a. Both Projects S and L, since both projects have NPV's >
0.
b. Project S, since the NPVS >
NPVL.
c. Neither Project S nor L,...

Project S costs $13,000 and its expected cash flows would be
$5,000 per year for 5 years. Mutually exclusive Project L costs
$34,500 and its expected cash flows would be $11,100 per year for 5
years. If both projects have a WACC of 15%, which project would you
recommend? Select the correct answer. a. Project S, since the NPVS
> NPVL. b. Both Projects S and L, since both projects have NPV's
> 0. c. Both Projects S and L,...

Project S costs $14,000 and its expected cash flows would be
$6,500 per year for 5 years. Mutually exclusive Project L costs
$37,500 and its expected cash flows would be $14,700 per year for 5
years. If both projects have a WACC of 13%, which project would you
recommend?
a. Project L, since the NPVL >
NPVS.
b. Both Projects S and L, since both projects have NPV's >
0.
c. Neither Project S nor L, since each project's NPV...

Project S costs $19,000 and its expected cash flows would be
$6,000 per year for 5 years. Mutually exclusive Project L costs
$38,500 and its expected cash flows would be $14,700 per year for 5
years. If both projects have a WACC of 16%, which project would you
recommend? Select the correct answer. a. Project S, since the NPVS
> NPVL. b. Project L, since the NPVL > NPVS. c. Both Projects
S and L, since both projects have IRR's...

Project S costs $18,000 and its expected cash flows would be
$7,000 per year for 5 years. Mutually exclusive Project L costs
$35,000 and its expected cash flows would be $8,400 per year for 5
years. If both projects have a WACC of 12%, which project would you
recommend? Select the correct answer. a. Project S, since the NPVS
> NPVL. b. Neither Project S nor L, since each project's NPV
< 0. c. Both Projects S and L, since...

Project S costs $13,000 and its expected cash flows would be
$7,000 per year for 5 years. Mutually exclusive Project L costs
$41,500 and its expected cash flows would be $10,500 per year for 5
years. If both projects have a WACC of 14%, which project would you
recommend?
Select the correct answer.
a. Both Projects S and L, since both projects have IRR's >
0.
b. Project S, since the NPVS >
NPVL.
c. Both Projects S and L,...

Project S costs $11,000 and its expected cash flows would be
$7,000 per year for 5 years. Mutually exclusive Project L costs
$38,000 and its expected cash flows would be $13,300 per year for 5
years. If both projects have a WACC of 12%, which project would you
recommend?
Select the correct answer.
a. Project L, since the NPVL >
NPVS.
b. Neither Project S nor L, since each project's NPV <
0.
c. Both Projects S and L, since...

Project S costs $15,000 and its expected cash flows would be
$4,000 per year for 5 years. Mutually exclusive Project L costs
$36,000 and its expected cash flows would be $13,400 per year for 5
years. If both projects have a WACC of 16%, which project would you
recommend?
Select the correct answer.
I. Project L, since the NPVL >
NPVS.
II. Project S, since the NPVS >
NPVL.
III. Neither S or L, since each project's NPV < 0....

Project S costs $16,000 and its expected cash flows would be
$4,000 per year for 5 years. Mutually exclusive Project L costs
$29,500 and its expected cash flows would be $9,300 per year for 5
years. If both projects have a WACC of 14%, which project would you
recommend?
Select the correct answer.
a. Neither Project S nor L, since each project's NPV <
0.
b. Both Projects S and L, since both projects have IRR's >
0.
c. Project...

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