Question

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 project?
**(Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.)**

Net present value | ||

Project A | $ | |

Project B | $ | |

**c.** What is the IRR for each project? **(Do
not round intermediate calculations and enter your answers as a
percent rounded to 2 decimal places, e.g.,
32.16.)**

Internal rate of return | ||

Project A | % | |

Project B | % |

Answer #1

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
–$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
–$
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...

Tri Star, Inc., has the following mutually exclusive
projects:
Year
Project A
Project B
0
–$
13,400
–$
8,800
1
8,000
3,500
2
6,600
3,000
3
2,100
5,400
Calculate 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
Based on the payback period, which project should the company
accept?
Project A
Project B
If the appropriate discount rate is 13...

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 cash flows of two mutually exclusive
projects for A–Z Motorcars. Assume the discount rate for both
projects is 12 percent. Year AZM Mini-SUV AZF Full-SUV 0 –$ 525,000
–$ 875,000 1 335,000 365,000 2 210,000 450,000 3 165,000 305,000 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 AZM Mini-SUV years AZF
Full-SUV years b. What is the NPV for...

Consider the following cash flows of two mutually exclusive
projects for Tokyo Rubber Company. Assume the discount rate for
both projects is 11 percent.
Year
Dry Prepreg
Solvent Prepreg
0
–$
1,740,000
–$
770,000
1
1,104,000
395,000
2
908,000
640,000
3
754,000
398,000
a.
What is the payback period for both projects? (Do not
round intermediate calculations. Round your answers to 2 decimal
places, e.g., 32.16.)
b.
What is the NPV for both projects? (Do not round
intermediate...

Consider the following cash flows of two mutually exclusive
projects for Tokyo Rubber Company. Assume the discount rate for
both projects is 12 percent.
Year
Dry Prepreg
Solvent Prepreg
0
–$
1,800,000
–$
800,000
1
1,110,000
425,000
2
920,000
700,000
3
760,000
410,000
a.
What is the payback period for both projects? (Do not
round intermediate calculations. Round your answers to 2 decimal
places, e.g., 32.16.)
b.
What is the NPV for both projects? (Do not round...

Novell, Inc., has the
following mutually exclusive projects.
Year
Project A
Project B
0
–$28,000
–$31,000
1
16,000
17,000
2
12,500
11,000
3
3,700
12,500
a-1.
Calculate the payback
period for each project. (Do not round intermediate
calculations and round your answers to 3 decimal places, e.g.,
32.161.)
a-2.
If the company's
payback period is two years, which, if either, of these projects
should be chosen?
Project A
Project...

Novell, Inc., has the following mutually exclusive projects.
Year
Project A
Project B
0
–$27,000
–$30,000
1
15,500
16,500
2
12,000
10,500
3
3,600
12,000
a-1.
Calculate the payback period for each project. (Do not
round intermediate calculations and round your answers to 3 decimal
places, e.g., 32.161.)
a-2.
If the company's payback period is two years, which, if either,
of these projects should be chosen?
Project A
Project...

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