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The following are the cash flows of two projects: Year Project A ProjectB 0 $(260) $ (260) 160 1 140 2 140 160 3 140 160 B 140 . Calculate the NPV for both projects if the discount rate is 11%. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Project NPV $ . 1% Project A - 174.34 $ /1% Project B " 130.99 . Suppose that you can choose only one of these projects. Which would you choose? ProjectA @ Explanation: Some values below may be shown as rounded for display purposes, though unrounded numbers should be used for actual calculations. . NPVA = =$260 + [$140 X Annuity factor (11%, 4 periods)] = -$260 + $140 x | gy~ gk 7 817434 NPVB = —$260 + [$160 X Annuity factor (11%, 3 periods)] = -8260 + $160 * | glrj~ il $130.99 . Since you can only choose one project, select the one with the higher positive NPV. "Project A" is better. Calculator computations: . CF0 =-260 CO1=140,FO1=4 =11 NPV CPT = 174.34 . CFO = -260 CO1 =160, FO1=3 =1 NPV CPT = 130.99
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Related Questions
The following are the cash flows of two projects:
Year
Project A
Project B
0
$
(400
)
$
(400
)
1
230
300
2
230
300
3
230
300
4
230
a. Calculate the NPV for both projects if the discount rate is 10%. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
b. Suppose that you can choose only one of these projects. Which would you choose?
Project B
Project A
Neither
arrow_forward
The following are the cash flows of two projects:
Year
Project A
Project B
0
$
(400
)
$
(400
)
1
230
300
2
230
300
3
230
300
4
230
a. Calculate the NPV for both projects if the discount rate is 10%. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
b. Suppose that you can choose only one of these projects. Which would you choose?
multiple choice
Project B
Project A
Neither
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The following are the cash flows of two projects:
Year
Project A
Project B
0
$
(400
)
$
(400
)
1
230
300
2
230
300
3
230
300
4
230
a. Calculate the NPV for both projects if the discount rate is 10%. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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The following are the cash flows of 2 projects
Year 0, Project A $340, Project B $340
Year 1, Project A $170, Project B $240
Year 2, Project A $170, Project B $240
Year 3, Project A $170, Project B $240
Year 4, Project A $170, Project B
Calculate the NPV for both projects if the discount rate is 10%
Project A - NPV?
Project B - NPV?
Suppose that you have can choose only one of these projects. Which would you choose?
Project A, B, or niether?
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Compute the internal rate of return for the cash flows of the following two projects. (Do
not round intermediate calculations and enter your answers as a percent rounded to
2 decimal places, e.g., 32.16.)
Year Project A
0 -$13,800
Project B
-$ 11,400
1
5,400
2,900
2
6,200
8,500
3
5,000
4,600
Project A
Project B
%
%
arrow_forward
Compute the internal rate of return for the cash flows of the following two projects: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Year
Project A
Project B
0
–$
9,800
–$
7,400
1
3,800
2,100
2
4,600
5,300
3
3,400
3,000
Internal rate of return
Project A
%
Project B
%
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Consider the following two mutually exclusive projects:
Year
Cash Flow (X)
Cash Flow (Y)
0
-$ 15,900
-$ 15,900
6,710
7,290
23
7,290
7,730
3,630
4,810
a. What is the IRR of Project X?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
b. What is the IRR of Project Y?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
c. What is the crossover rate for these two projects?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
a. IRR
b. IRR
%
%
c. Crossover rate
%
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es
A project has the following cash flows:
Year Cash Flow
0
-$ 17,200
1
7,900
2
9,200
3
7,700
a. What is the NPV at a discount rate of zero percent? (Do not round intermediate
calculations and round your answer to the nearest whole number, e.g., 32.)
b. What is the NPV at a discount rate of 12 percent? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
c. What is the NPV at a discount rate of 22 percent? (A negative answer should be
indicated by a minus sign. Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
d. What is the NPV at a discount rate of 28 percent? (A negative answer should be
indicated by a minus sign. Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
a. NPV
b. NPV
c. NPV
d. NPV
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A project has the following cash flows:
Year
Cash Flow
0
–$
16,100
1
6,800
2
8,100
3
6,600
a.
What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
b.
What is the NPV at a discount rate of 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c.
What is the NPV at a discount rate of 20 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
d.
What is the NPV at a discount rate of 29 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
arrow_forward
Vital Silence, Inc., has a project with the following cash flows:
Year Cash Flow
0
$27,300
11,300
2
14,300
3
10,300
The appropriate discount rate is 16 percent. What is the IRR for this project? (Do not
round intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
IRR
%
arrow_forward
Compute the internal rate of return for the cash flows of the following two projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Year
Project A
Project B
0
–$
10,800
–$
8,400
1
4,200
2,300
2
5,000
6,100
3
3,800
3,400
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Last one is $13 and $62 respectively
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N2.
Account
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Suppose you are offered a project with the following cash flows:
Year Cash Flows
0
1
2
3
4
$8,800
-4,800
-3,500
-2,600
-1,400
a. What is the IRR of this offer? (Do not round intermediate calculations and enter your
answer as a percent rounded to 2 decimal places, e.g., 32.16.)
IRR
%
O Accept
O Reject
☆
b. If the appropriate discount rate is 13 percent, should you accept this offer?
c. If the appropriate discount rate is 25 percent, should you accept this offer?
arrow_forward
Compute the internal rate of return for the cash flows of the following two projects:
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
Year
Project A
Project B
0
−$ 13,800
−$ 11,400
1
5,400
2,900
2
6,200
8,500
3
5,000
4,600
arrow_forward
Consider the following two mutually exclusive projects:
Year
Cash Flow
(X)
Cash Flow
(Y)
0
$20,000
$20,000
1
8,850
10,100
23
9,100
7,800
8,800
8,700
Calculate the IRR for each project. (Round your answers to 2 decimal places. (e.g.,
32.16)).
IRR
Project X
Project Y
%
%
What is the crossover rate for these two projects? (Round your answer to 2 decimal
places. (e.g., 32.16)).
Crossover rate
%
arrow_forward
Consider projects A and B with the following cash flows:
Ce
$32
57
$16
+$16
+ 32
+$ 16
32
a-1. What is the NPV of each project if the discount rate is 12%? (Do not round intermediate calculations. Round your answers to 2
decimal places.)
6-2. Which project has the higher NPV?
b-1. What is the profitability Index of each project? (Do not round intermediate calculations. Round your answers to 2 decimal
places.)
b-2. Which project has the higher profitablity index?
c. Which project is most attractive to a firm that can ralse an unlimited amount of funds to pay for its investment projects?
d. Which project is most attractive to a firm that is limited in the funds it can ralse?
ok
nt
mces
Project A
Project B
a-1. NPV of ench project if the discount rate is 12%
a-2. Which project has the higher NPV?
b-1. Profitability index of each projoct
b-2. Which project has the higher protitability index?
Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for…
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A project has the following cash flows set out below. What is the profitability index of this project if the relevant discount rate is 2 percent? Enter your final answer to two decimal places.
Year
Cash flow
0
-1,745
1
537
2
2,066
3
3,912
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6. You are choosing between two projects. The cash flows for the projects are given in the following Data table ($ million):
Project
Year 0
Year 1
Year 2
Year 3
Year 4
A
−$48
$27
$19
$22
$15
B
−$100
$22
$39
$48
$62
The IRR for project A is __________________________%.
(Round to one decimal place.)
The IRR for project B is____________________________%.(Round to one decimal place.)
If your discount rate is 5.4%, the NPV for project A
is $_______________million.(Round to two decimal places.)
If your discount rate is 5.4%, the NPV for project B is
$______________ million.(Round to two decimal places.)
NPV and IRR rank the two projects differently because they are measuring different things.
___________________is measuring value creation, while
___________________is measuring return on investment. Because returns do not scale with different levels of investment, the two measures may give different rankings when…
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You are choosing between two projects. The cash flows for the projects are given in the following table ($ million):
Year 2
Year 0
- $51
- $101
$21
$42
Project
A
B
Year 1
$25
$20
a. What are the IRRs of the two projects?
b. If your discount rate is 4.6%, what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
%. (Round to one decimal place.)
a. What are the IRRs of the two projects?
The IRR for project A is
The IRR for project B is
%. (Round to one decimal place.)
b. If your discount rate is 4.6%, what are the NPVs of the two projects?
If your discount rate is 4.6%, the NPV for project A is $
C
Year 3
$21
$50
Year 4
$15
$59
million. (Round to two decimal places.)
million. (Round to two decimal places.)
If your discount rate is 4.6%, the NPV for project B is $
c. Why do IRR and NPV rank the two projects differently?
(Select from the drop-down menus.)
is measuring return on
NPV and IRR rank the two projects differently because they are measuring…
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You are given the following cash flow for a project, and told that PW(8%) = $8,300 for this project. What is the value of the unknown payment X for the second
and third periods?
n Cash Flow
0 -$36,000
1 $0
2 $X
3 $X
O Cannot be determined.
O $24,842.08
O $26,829.44
O $5,026.74
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You've estimated the following cash flows (in $) for two projects:
A
B
C
1
Year
Project A
Project B
2
0
-71
-254
3
1
15
50
4
2
21
73
5
3
29
82
6
4
25.2
113.24
The required return is 7% for both projects.
1. What is the IRR for project A?
2. What is the IRR for project B?
3. What is the NPV of project A?
4. What is the NPV of project B?
5. If the projects are mutually exclusive, which project should you choose?
Project B, based on the NPV
Project A, based on the IRR
Project A, based on the NPV
Project B, based on the IRR
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The following are the cash flows of two projects:
Project B
Year Project A
0 $ (235)
$ (235)
115
135
115
135
115
135
115
1234O
1
2
3
4
What are the internal rates of return on projects A and B?
Note: Enter your answers as a percent rounded to 2 decimal places.
Project
A
B
IRR
%
%
arrow_forward
Vital Silence, Inc., has a project with the following cash flows:
Year
Cash Flow
0
–$
27,800
1
11,800
2
14,800
3
10,800
The appropriate discount rate is 18 percent. What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
arrow_forward
You are choosing between two projects. The cash flows for the projects are given in the following table ($ million):
Project
Year 0
Year 1
Year 2
Year 3
Year 4
- $51
- $102
$25
$19
$18
$40
$21
$48
$14
$59
A
В
a. What are the IRRS of the two projects?
b. If your discount rate is 5.3%, what are the NPVS of the two projects?
c. Why do IRR and NPV rank the two projects differently?
a. What are the IRRS of the two projects?
The IRR for project A is %. (Round to one decimal place.)
The IRR for project B is
%. (Round to one decimal place.)
b. If your discount rate is 5.3%, what are the NPVS of the two projects?
If your discount rate is 5.3%, the NPV for project A is $
million. (Round to two decimal places.)
If your discount rate is 5.3%, the NPV for project B is $
million. (Round to two decimal places.)
c. Why do IRR and NPV rank the two projects differently? (Select from the drop-down menus.)
NPV and IRR rank the two projects differently because they are measuring different things.
is…
arrow_forward
Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
-$
-$
0
1235
4
NO
a-
Whichever project you choose, if any, you require a return of 14 percent on your
investment.
Project A
Project B
357,000
38,000
58,000
58,000
433,000
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.)
46,500
23,300
21,300
18,800
13,900
Project A
Project B
Payback period
If you apply the payback criterion, which investment will you choose?
2.
O Project A
O Project B
years
years
b- What is the discounted payback period for each project? (Do not round intermediate
1. calculations and round your answers to 2 decimal places, e.g., 32.16.)
Discounted payback period
years
years
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