A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:47Discount Rate0%5100121518.135+Project A-$300 -$387 -$193 -$100-$400 $131 $131 $131+$600 $600 $850$131 $131 $131-$180$0Project Ba. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.Project A: $Project B: $b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places.Project A:Project B:c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places.Project A:Project B:d. From your answers to parts a-c, which project would be selected?-Select-If the WACC was 18%, which project would be selected?-Select-e. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.NPV Project ANPV Project B23.541$%%%%2f. Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places.%6$%g. What is each project's MIRR at a WACC of 18%? Do not round intermediate calculations. Round your answers to two decimal places.Project A:Project B:

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EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 17PROB

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A company has a 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2 3 4 5 6 7 Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180 Project B -$405 $131 $131 $131 $131 $131 $131 $0 What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. a. Project A: $ b. Project B: $ 3 What is each project's IRR? Round your answer to two decimal places. c. Project A:% d. Project B: % What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Do not round your intermediate calculations. e. Project A: % f. Project B: % g. From your answers to parts a-c, which project would be selected? h. If the WACC was 18%, which project would be selected? Construct NPV profiles for Projects A and B. Round your answers to the nearest cent.…
A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2 3 4 5 6 7 Year 0 1 2 3 4 5 6 7 Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180 Project B -$405 $133 $133 $133 $133 $133 $133 $0 Open spreadsheet What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ fill in the blank 2 Project B: $ fill in the blank 3 What is each project's IRR? Round your answer to two decimal places. Project A: fill in the blank 4% Project B: fill in the blank 5% What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Do not round your intermediate calculations. Project A: fill in the blank 6% Project B: fill in the blank 7%…
A company has an 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2 3 4 5 6 7 Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180 Project B -$400 $132 $132 $132 $132 $132 $132 $0 What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % From your answers to parts a-c, which project would be selected? If the WACC was 18%, which project would be selected? Construct…
Bates & Reid, LLC, has identified two mutually exclusive projects, A and B. Project A has a NPV of $14,050.47. Project B has cash flows as described below. Year Cash Flow B 0 -$77,000 1 35,000 2 25,000 3 25,000 4 25,000 If the WACC is 8%, then B’s NPV is _______ and therefore the firm should accept _________ $11,337.55; project B because NPVA > NPVB. $15,062.43; project B because NPVA < NPVB. $15,062.43; project A because NPVA < NPVB. The projects are equally profitable. $11,337.55; project A because NPVA > NPVB.
A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 01234 Project S-$1,000$869.10$260$5$10Project L-$1,000$0$250$420$831.87 The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.
a company is deciding between two mutually exclusive projects. the cash flows are shown below. year 0 project a -$1,000 project b -$1,000 ywar 1 project a 550 project b 400 year 2 project a 550 projecy b 600 year 3 project a 550 project b 900 if the cosy of capital is 10% which project should the compsny select
A firm whose cost of capital is 10% is considering two mutuallyexclusive projects A and B, the cash flows of which are as below: YearProject AProject B7050.00080.000162,50096.170Suggest which project should be taken up using (i) net present
A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2 3 4 5 6 7 Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180 Project B -$400 $134 $134 $134 $134 $134 $134 $0 Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Discount Rate NPV Project A NPV Project B 0% $ $ 5 10 12 15 18.1 24.51
Multiple choice: Assume that Aurora Company is planning to invest P4M in a new project which will provide a uniform net cash inflows of P1.3M for 5 years. The company uses 12% as cost of capital. If the NPV and IRR are to be computed manually, the values are: • NPV= P686,200; IRR= 18.736%• NPV= P686,200; IRR= 18.850%• NPV= P686,200; IRR= 18.718%• NPV= P686,200; IRR= 18.729%
A company has a 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ fill in the blank 2 Project B: $ fill in the blank 3 What is each project's IRR? Round your answer to two decimal places. Project A: fill in the blank 4% Project B: fill in the blank 5% What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Do not round your intermediate calculations. Project A: fill in the blank 6% Project B: fill in the blank 7% From your answers to parts a-c, which project would be selected? If the WACC was 18%, which project would be selected? Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus…
A company has an 11% WACC and is considering twomutually exclusive investments (that cannot be repeated) with the following cash flows: a. What is each project’s NPV?b. What is each project’s IRR?c. What is each project’s MIRR? (Hint: Consider Period 7 as the end of Project B’s life.)d. From your answers to parts a, b, and c, which project would be selected? If the WACCwas 18%, which project would be selected?
Bruin, Incorporated, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$ 66,000 −$ 66,000 1 42,000 28,400 2 36,000 32,400 3 24,000 38,000 4 15,200 24,400 a-1. What is the IRR for each of these projects? a-2. If you apply the IRR decision rule, which project should the company accept? b-1. Assume the required return is 12 percent. What is the NPV for each of these projects? b-2. Which project will you choose of you apply the NPV decision rule? c-1. Over what range of discount rates would you choose Project A? c-2. Over what range of discount rates would you choose Project B? d. At what discount rate would you be indifferent between these two projects?

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