Question

Chestnut Tree Farms has identified the following two mutually exclusive projects. The company uses a discount...

Chestnut Tree Farms has identified the following two mutually exclusive projects. The company uses a discount rate of 6%.

Year

Cash Flow (A)

Cash Flow (B)

0

-38,000

-38,000

1

10,735

16,530

2

14,060

13,395

3

13,015

12,255

4

7,505

2,090
  1. What is the IRR of each project? Based on the IRR criterion, which project(s) would you choose?
  1. What is the NPV of each project? Based on the NPV method which project(s) would you choose?

  1. What is your final choice of project?
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Homework - Capital Budgeting 1.The Hyatt Group Inc., has identified the following two mutually exclusive projects:...
Homework - Capital Budgeting 1.The Hyatt Group Inc., has identified the following two mutually exclusive projects: ​Cash Flows​Cash Flows Year​Project A​Project B 0​-$10,000​_$10,000 1​ 200​ 5,000 2​ 500​ 6,000 3​ 8,200​ 500 4​ 4,800​ 500 a. What is the IRR of each of these projects? If you apply the IRR decision rule, which project should the company accept? Is this decision necessarily correct? b. If the required rate of return is 9 percent, what is the NPV of each of...
1.The Hyatt Group Inc., has identified the following two mutually exclusive projects:                         Cash Flows  &n
1.The Hyatt Group Inc., has identified the following two mutually exclusive projects:                         Cash Flows                 Cash Flows Year                Project A                     Project B    0                   -$10,000                      _$10,000    1                           200                            5,000    2                           500                            6,000    3                        8,200                               500    4                        4,800                               500 What is the IRR of each of these projects?  If you apply the IRR decision rule, which project should the company accept?  Is this decision necessarily correct? If the required rate of return is 9 percent, what is the NPV of each of the projects?  Which project will you choose if you apply the NPV decision rule? Over what range...
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...
Consider the following two mutually exclusive projects: Year Cash Flow (Project I) Cash Flow (Project II)...
Consider the following two mutually exclusive projects: Year Cash Flow (Project I) Cash Flow (Project II) 0 -$12,300 -$44,000 1 $1,800 $14,000 2 $6,000 $30,000 3 $2,000 $5,000 4 $5,000 $10,000 5 $7,000 $5,000 The required return is 10% for both projects. Assume that the internal rate of return (IRR) of Project I and Project II is 18% and 15%, respectively. a) Which project will you choose if you apply the NPV criterion? Why? b) Which project will you choose...
Garage, Inc., has identified the following two mutually exclusive projects:     Year Cash Flow (A) Cash...
Garage, Inc., has identified the following two mutually exclusive projects:     Year Cash Flow (A) Cash Flow (B) 0 –$ 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...
You are considering the following two mutually exclusive projects with the following cash flows:                           &nbsp
You are considering the following two mutually exclusive projects with the following cash flows:                                                                                  Project A                                  Project B                                                             Year    Cash Flow                   Year    Cash Flow                                                             0          -$75,000                         0       -$70,000                                                             1          $19,000                         1       $10,000                                                             2          $48,000                         2       $16,000                                                             3          $12,000                         3       $72,000                        Required rate of return                     10 %                                        13 %                             Calculate the NPV, IRR,...
Piercy, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
Piercy, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$77,500 −$77,500 1 43,000 21,500 2 29,000 28,000 3 23,000 34,000 4 21,000 41,000 Over what range of discount rates would you choose Project A? Project B? At what discount rate would you be indifferent between these two projects? Explain.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT