2) First, calculate the payback period and NPV for all projects below. For all the projects, the relevant discount rate is 10%. Then, comment on why the payback period provides misleading information about the following: a. Project A b. Project B versus Project C c. Project D versus Project E d. Project D versus Project F Year A B C D E F 0 -1.000 -1.000 -1.000 -1.000 -1.000 -1.000 1 1,000 100 400 500 400 500 2 200 300 500 400 500 3 300 200 500 400 10.000 4 400 100 400 5 500 500 400
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- Cooney Co. is evaluating the following mutually exclusive projects. The manager has determined that the appropriate discount rate is 6.2% for all the recommended projects. Rank order the projects based on the profitability index. Year Project A Project B Project C 0 (35,000) (65,000) (86,000) 1 - 40,000 44,000 2 - 22,000 44,000 3 55,000 22,000 35,000Use these data to compute for each (a) the NPV at discount rates of 10 and 5 percent, (b) the BCR at the same rates, and (c) the internal rate of return for each. Describe the facts about the projects that would dictate which criterion is appropriate, and indicate which project is preferable under each circumstance.Suppose the following two independent investment opportunities are available to Fitz, Inc. The appropriate discount rate is 8 percent. Year Project Alpha Project Beta 0 −$5,500 −$7,100 1 2,800 1,600 2 2,700 5,500 3 1,700 4,500 a. Compute the profitability index for each of the two projects. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) b. Which project(s), if either, should the company accept based on the profitability index rule? multiple choice Neither project Project Beta Both projects Project Alpha
- Tri Star, Inc., has the following mutually exclusive projects: Year Project A Project B 0 –$ 13100 –$ 8500 1 7300 3200 2 6300 2700 3 2,100 5100 Calculate the payback period for each project. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) If the appropriate discount rate is 9 percent, what is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)（i.）If the projects are mutually exclusive and the required rate of return is 7%, which of the projects is chosen by NPV?a. Project Omicronb. Project Upsilonc. Project Omegad. Project Upsilon and Project Omegae. None of the above (ii.)If you use a cut-off period of two years, which of the projects would you accept using the payback period method?a. Project Omicronb. Project Upsilonc. Project Omegad. Project Upsilon and Project Omegae. None of the aboveWilson is concerned that this project has multiple its year 1, 2 flows -50 100 0 -50 how many discount rates produce a zero NPV for the project? a. two, discount rates of 0% and 62% b.one, discount rate of 0 percent c. two, discount rates of 0% and 32%
- Your division is considering two projects. The discount rate is 10 percent, and the projects’ after- tax cash flows would be:Years 01234 Project A -$30 $5 $10 $15 $20 Project B -$30 $20 $10 $8 $6a. Calculate the projects’ NPVs and IRRs.b. If the two projects are independent, which project(s) should be chosen?c. If the two projects are mutually exclusive, which project should be chosen?d. Calculate the projects’ regular paybacks and discounted paybacks. Which project looksbetter when judged by the paybacks?e. What two pieces of information does the payback convey that are absent from the othercapital budgeting decision methods (NPV and IRR)?The NPV of a project when discounted using a discount rate of 6% is positive $ 40,000. When the same project is discounted using a discount rate of 16% the NPV is negative $ 80,000. What is the IRR using linear interpolation A.5.33% B.11.00% C.9.33% D.0%Estimate the NPV, ROI, and payback period for the XYZ project using the information below, Estimated costs for the XYZ project are $200,000 in year 0 and $50,000 each in years 1, 2, and 3. Estimated benefits are $0 in year 0 and $150,000 each year in years 1, 2 and 3. Calculate the following i) NPV, ii) ROI, iii) and year in which payback occurs for a discount rate of 6.5
- Please show calcualtions: a) Calculate the NPV and IRR for the following project with a discount rate of 10% - ncf yr 0 = -250,000, ncf yr 1 = 200,000, ncf yr 2 = 350,000, ncf yr 3 = 300,000, ncf yr 4 = 300,000, ncf yr 5 = -50,000Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project? Year Project 0 ($11,368,000) 1 $ 2,127,589 2 $ 3,787,552 3 $ 3,125,650 4 $ 4,115,899 5 $ 4,556,424 Round to two decimal places.Calculating Payback Period and NPV Novell, Inc., has the following mutually exclusive projects. Year Project A Project B 0 -$15,000 -$19,000 1 10,400 12,700 2 5,900 6, 100 3 2,100 5, 300 Suppose the company’s payback period cutoff is two years. Which of these two projects should be chosen? Suppose the company uses the NPV rule to rank these two projects. Which project should be chosen if the appropriate discount rate is 15 percent?