Question
Consider the following two mutually exclusive projects: Initial Net Cash Flow Per Year Outlay 1 2...
Consider the following two mutually exclusive projects:
Initial Net Cash Flow Per Year
Outlay 1 2 3 4
Project X $8,000 $4,400 $4,400 $4,400 $4,400
Project Y $8,000 $0 $15,000
Notice that Project X has a 4 year life span while Project Y has only a 2 year life span.
A) Calculate the NPV, IRR, and EAA for each of these two projects, assuming a 10% discount rate.
B) Use your calculations to clearly explain which project should be undertaken.
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
Consider the following two mutually exclusive projects: Year 0 Cash Flow(X) - $19,200 Cash Flow(Y) -$19,200...
Consider the following two mutually exclusive projects:
Year 0 Cash Flow(X) - $19,200 Cash Flow(Y) -$19,200
Year 1 Cash Flow(X) 8,650 Cash Flow(Y) 9,700
Year 2 Cash Flow(X) 8,700 Cash Flow(Y) 7,600
Year 3 Cash Flow (X) 8,600 Cash Flow (Y) 8,500
A.) Calculate the IRR for each project.
Project X ___%
Project Y ___%
B.) What is the crossover rate for these two projects?
C.) What is the NPV of Projects X and Y at discount rates of 0...
Project X and Project Y are two mutually exclusive projects. Project X requires an initial outlay...
Project X and Project Y are two mutually exclusive projects.
Project X requires an initial outlay of $38,000 and generates a net
cash flow of $14,000 per year for six years. Project Y requires an
initial outlay of $52,000, and will generate cash flows of $15,300
per year for eight years. Which project should be chosen and why?
(Assume that the discount rate for both projects is 10
percent).
A. Project X because Project X has
a larger NPV than Project...
Mahjong, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash...
Mahjong, Inc., has identified
the following two mutually exclusive projects:
Year
Cash Flow
(A)
Cash Flow
(B)
0
–$37,300
–$37,300
1
19,660
7,180
2
15,170
13,680
3
12,660
20,160
4
9,660
24,160
Required:
(a)
What is the IRR for Project
A?
(b)
What is the IRR for Project
B?
(c)
If the required return is 11
percent, what is the NPV for Project A?
(d)
If the required...
Bruin, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash...
Bruin, Inc., has identified the following two mutually
exclusive projects:
Year
Cash Flow (A)
Cash Flow (B)
0
–$37,000
–$37,000
1
19,000
6,000
2
14,500
12,500
3
12,000
19,000
4
9,000
23,000
a. What is the IRR for Project A?
b. What is the IRR for Project B?
c. If the required return is 11 percent, what
is the NPV for Project A?
d. If...
Bruin, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash...
Bruin, Inc., has identified the following two mutually
exclusive projects:
Year
Cash Flow (A)
Cash Flow (B)
0
–$37,000
–$37,000
1
19,000
6,000
2
14,500
12,500
3
12,000
19,000
4
9,000
23,000
a. What is the IRR for Project A?
b. What is the IRR for Project B?
c. If the required return is 11 percent, what
is the NPV for Project A?
d. If...
Bruin, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash...
Bruin, Inc., has identified the following two mutually
exclusive projects:
Year
Cash Flow (A)
Cash Flow (B)
0
–$36,500
–$36,500
1
18,820
6,400
2
14,320
12,900
3
11,820
19,400
4
8,820
23,400
a. What is the IRR for Project A?
b. What is the IRR for Project B?
c. If the required return is 13 percent, what
is the NPV for Project A?
d. If...
You are trying to determine which of two mutually exclusive projects to undertake. Project Adam has...
You are trying to determine which of two mutually exclusive
projects to undertake. Project Adam has an initial outlay of
$10,000, an NPV of $4,392.15, an IRR of 11.33%, and an EAA of
$1,158.64. Project Eve has an initial outlay of $15,000, an NPV of
$5,833.73, an IRR of 9.88%, and an EAA of $1,093.50. The cost of
capital for both projects is 9%, and the projects have different
lives. If the projects are repeatable, then:
You should do both...
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0...
Consider the following two
mutually exclusive projects:
Year
Cash Flow
(X)
Cash Flow
(Y)
0
–$
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...
QUESTION 20 For this and the next 3 questions. Consider the following MUTUALLY EXCLUSIVE projects. Cost...
QUESTION 20
For this and the next 3 questions. Consider the following
MUTUALLY EXCLUSIVE projects. Cost of capital is 10%. Calculate
IRR.
Year
Project A
Project B
0
-40,000
-20,000
1
8,000
7,000
2
14,000
13,000
3
13,000
12,000
4
12,000
5
11,000
6
10,000
IRR (A) = 17.47%. IRR(B) = 25.20%
IRR (A) = 17.77%. IRR(B) = 25.20%
IRR (A) = 17.47%. IRR(B) = 20%
None of the above is completely correct
1 points
QUESTION 21
Calculate NPV...
Garage, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash...
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...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 11 minutes ago
asked 11 minutes ago
asked 21 minutes ago
asked 23 minutes ago
asked 28 minutes ago
asked 46 minutes ago
asked 49 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago