Consider the following two mutually exclusive projects: year cash flow A cash flow B 0 -$10,110 -$10,110 1 5,373 4,443 2 3,373 3,543 3 4,473 5,343 What is the crossover rate for these two projects? 29 percent 48 percent 71 percent 75 percent 94 percent

Consider the following two mutually exclusive projects: year cash flow A cash flow B 0 -$10,110 -$10,110 1 5,373 4,443 2 3,373 3,543 3 4,473 5,343 What is the crossover rate for these two projects? 29 percent 48 percent 71 percent 75 percent 94 percent

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section10.4: Internal Rate Of Return (irr)

Problem 2ST

See similar textbooks

Related questions

Q: Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0…

A: Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Q: Consider the following cash flows on two mutually exclusive projects: Year Project A…

A: NPV is the present value of future cashflows

Q: Consider the following two projects: Projec Year 0 Year 1 Year 2 Year 3 Year 4 Cash Cash Cash Cash…

A: Net Present Value is one of the capital budgeting techniques. It is defined as the difference…

Q: Consider the following two mutually exclusive projects: Cash Flow Cash Flow Year (X) (Y) 519,500…

A: Before investing in new projects, profitability is evaluated by using various methods like NPV, IRR,…

Q: alculate the NPV of project X

A: It refers to the long term investment decisions that has been taken by the top management of a…

Q: Bruin, Inc., has identified the following two mutually exclusive projects: Year Cash Flow…

A: Therefore, the internal rate of return of Cash flow A is 17.85% and B is 17.01%.

Q: 2.) Cash flows for two different investment projects are given in the Chart. Cash flows for two…

A: The net present value is the present value of the project's cash flows less the initial costs.

Q: Consider the following two mutually exclusive projects: Second part of the Question Year Cash…

A: The difference between the current value of cash inflows and outflow of cash over a period of time…

Q: Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0…

A: NPV is defined as the difference between the present value of all the cash outflows and cash inflows…

Q: Calculating IRR Compute the internal rate of return for the cash flows of the following two projects…

A: Internal Rate of Return is the discounting rate where the net present value of the project is zero.

Q: Consider the following two mutually exclusive projects: Cash Flow Cash Flow Year (X) -$19,600 19,600…

A: Net present value is a capital budgeting method that is used to determine the present value of the…

Q: Consider the following two mutually exclusive projects: Year Cashflow (a)…

A: Excel Formulas:

Q: Q8 - Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Compute the internal rate of return for the cash flows of the following two projects. (Do not round…

A: IRR is the annual return on the project based on the cashflows firm will receive from the project.

Q: Assume projects A and B are mutually exclusive. The respective cash flows for projects A a B are…

A: Given information : Year Cash flows A Cash flows B 0 $ (575,000.00) $ (980,000.00) 1 $…

Q: Cash flows from two different investment projects: Project / Year 0 1 2 3 Project A -2500 1000 1500…

A: The projects A and B can be valuated using the Net Present value of the project. The Cash flows the…

Q: 1. Evaluation of Four Independent Projects (20') The cash flow profiles of four independent projects…

A: Net present Value =Present Value of Future cashflow - Initial amount invested

Q: Basic Present Value Concepts Annual cash inflows that will arise from two competing investment…

A: Cash inflows: The amount of cash received by a company from the operating, investing, and financing…

Q: Piercy, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Consider the following two sets of project cash flows: Project Year 0 Year 1 Year 2 Year 3 Year 4…

A: a) It is assumed that both the project is mutually exclusive. The correct investment decision and…

Q: Consider two mutually exclusive projects, A and B, whose costs and cash flows are shown in the…

A: Irr is the rate of return at which NPV (net present value ) of the project is zero. cross over rate…

Q: Consider the following two mutually exclusive projects: Year Cash Flow Cash Flow…

A: Please find the answers to the above questions below:

Q: Problem. Assume the following cash flow for 2 propects. Assuming that the cash Sows are occurring at…

A: Solution Formula for payback period =full years until recovery + unrecovered cost at beginning of…

Q: Garage, Inc., has identified the following two mutually exclusive projects: Cash Flow (A) Cash Flow…

A: When there is a conflict between the NPV and IRR. NPV rule will prevail.

Q: Problem. Assume the following cash flow for 2 projects. Assuming that the cash flows are occurring…

A: Solution Concept Payback period is the period in which the initial investment is recovered Payback…

Q: Sketch the NPV profiles for X and Y over a range of discount rates from zero to 25 percent (take 0%,…

A: Since you have posted a question with multiple subparts, we will solve the first three sub-parts for…

Q: Comparison of NPV and IRR: The Case of Mutually Exclusive Projects Estimated cashflow data for each…

A: Independent investments are those that do not affect one another whereas the mutually exclusive…

Q: flows. Period (Year) Cost (Initial Net cash flow Cost (Initial Outlay) Net cash flow Outlay) $45,000…

Q: Consider the following two mutually exclusive projects: Cash Flow Cash Flow Year (M) 19,700 (X)…

A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…

Q: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$10,110…

A: Crossover rate is the rate at which both projects give same net present value. It means, when the…

Q: Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow…

A: YEAR CASHFLOWS DISCOUNT FACTOR DISCOUNTED CASHFLOWS 0 73 1 30 0.909 27.27 2 30 0.826…

Q: 1. Consider the following investment projects: Year(n) Net cash flow Project 1 -$1,200 Project 2…

A: We need to find the incremental IRR (r) Initial incremental cashflow (I) = - $2000 - (- $1200) = -…

Q: Calculating IRR Compute the internal rate of return for the cash flows of the following two…

A: IRR is the rate at which NPV becomes Zero Using excel IRR function

Q: You are analyzing two proposed capital investments with the following cash flows: Year Project X…

A: Formulas:

Q: You are evaluating two projects with the following cash flows: Year Project X Project Y 0…

A: Crossover rate is the cost of capital at which the NPV of two projects is equal.

Q: The following are the cash flows of two projects: Year Project A Project B 0 $ (400 ) $ (400…

A: a) NPV for Project A and project B is $329.07 and $346.06. Computation of NPV: Excel spread…

Q: Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow…

A: Payback period for Project A can be calculated as below: Here, A = Last period or year in which the…

Q: 2) You have 3 projects with the following cash flows: Year 0 1 2 3 4 Project 1 -$150 $20 $40 $60 $80…

A: Internal Rate of Return is that rate at which Present Value of Cash Inflow is equal to Present value…

Q: The projected cash flows for two mutually exclusive projects are as follows: t= 0…

A: The crossover rate can be calculated using =IRR(values,[guess]) Values = Cash flows Guess = number…

Q: Piercy, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash…

A: NPV or Net present value is determined by adding the discounted value of all inflows and outflows to…

Q: 1. The Bolster Company is considering two mutually exclusive projects: Year Cash Flow A Cash Flow B…

A: given, r = 12% year cashlflow A cashflow B 0 -100000 -100000 1 31250 0 2 31250 0 3 31250…

Q: Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y)…

A: Note - As specifically mentioned to solve Part C, we have solved only the required part of the…

Q: Projects A and B have the following net cash flows: End of year 0 -$250 -$250 1 2 $240 $260 $300…

A: Req-a-i Project A Year Cash Flow Cumulative Cash Flow Year 0 -$250 -$250 Year 1 $240…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Consider the following two mutually exclusive projects:

year cash flow A cash flow B

0 -$10,110 -$10,110

1 5,373 4,443

2 3,373 3,543

3 4,473 5,343

What is the crossover rate for these two projects?

29 percent
48 percent
71 percent
75 percent
94 percent

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$10,110 -$10,110 1 5,373 4,443 2 3,373 3,543 3 4,473 5,343 What is the crossover rate for these two projects?
Consider the following two mutually exclusive projects: Year Cash Flow Cash Flow (X) (Y) 0 -$20,800 -$20,800 1 9,050 10,500 2 9,500 8,000 3 9,000 8,900 IRR Project X: 15.49% Project Y: 15.69% What is the crossover rate for these two projects? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Crossover rate ______%
Consider the following two mutually exclusive projects: Year Cashflow (a) Cashflow (b) 0 -$10,110 -$10,110 1 $5,373 $4,443 2 $3,373 $3,543 3 $4,473 $5,343 What is the crossover rate for these two projects?
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y)0-$19.100-$ 19,100 18,625 9,650 2 8,650 7,575 3 8,575 8,475 Calculate the IRR for each project. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) What is the crossover rate for these two projects? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.) What is the NPV of Projects X and Y at discount rates of 0 percent, 15 percent, and 25 percent?
Consider the following two mutually exclusive projects: Year Cashflow (a) Cashflow (b) 0 - $318,844 -$27,476 1 $27,700 $9,057 2 $56,000 $10,536 3 $55,000 $11,849 4 $399,000 $13,814 The required return is 15 percent for both projects. Which one of the following statements related to these projects is correct?A. Because both the IRR and the PI imply accepting Project B, that project should be accepted.B. The profitability rule implies accepting Project A.C. The IRR decision rule should be used as the basis for selecting the project in this situation.D. Only NPV implies accepting Project A.E. NPV, IRR, and PI all imply accepting Project A.
Consider the following two mutually exclusive projects: Year Cash Flow Cash Flow B 0 -$318,844 -$27,476 1 27,700 9,057 2 56,000 10,536 3 55,000 11,849 4 399,000 13,814 The required return is 15 percent for both projects. Which one of the following statements related to these projects is correct? A. Because both the IRR and the PI imply accepting Project B, that project should be accepted.B. The profitability rule implies accepting Project A.C. The IRR decision rule should be used as the basis for selecting the project in this situation.D. Only NPV implies accepting Project A.E. NPV, IRR, and PI all imply accepting Project A.
You are evaluating two projects with the following cash flows: Year Project X Project Y 0 −$543,000 −$513,000 1 219,300 209,000 2 229,200 218,800 3 236,400 226,700 4 196,100 187,500 What is the crossover rate for these two projects?
Consider the following cash flows on two mutually exclusive projects:Year Project A Project B0 –$58,000 –$73,0001 38,000 37,0002 33,000 46,0003 28,000 49,000The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 13 percent, and the inflation rate is 5 percent. Calculate the NPV for each project.
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 −$ 20,200 −$ 20,200 1 8,900 10,200 2 9,200 7,850 3 8,850 8,750 Calculate the IRR for each project. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) What is the crossover rate for these two projects? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the NPV of Projects X and Y at discount rates of 0 percent, 15 percent, and 25 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Consider the following two mutually exclusive projects: Year Cash Flow(X) Cash Flow(Y) 0 –$ 19,900 –$ 19,900 1 8,825 10,050 2 9,050 7,775 3 8,775 8,675 c) Calculate the crossover rate for these two projects. Consider the following two mutually exclusive projects: Year Cash Flow(X) Cash Flow(Y) 0 –$ 19,900 –$ 19,900 1 8,825 10,050 2 9,050 7,775 3 8,775 8,675 you have solved all other parts only balance Part C c) Calculate the crossover rate for these two projects.
Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 $-52,000 $-53,000 1 22,000 24,000 2 20,500 23,000 The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 11 percent and the inflation rate is 4 percent. Calculate the NPV for each project A and B.
Consider the following two mutually exclusive projects:Year Cash Flow (X) Cash Flow (Y)0 -$365,000 -$38,0001 25,000 16,0002 65,000 12,0003 65,000 17,0004 425,000 15,000Whichever project you choose, if any, you require a 13 percent return on your investment. i. Which investment will you choose if you use the payback decision criteria? Justify your answer.ii. Which investment will you choose if you use the NPV decision criteria? Justify your answer.iii. Which project will you choose ultimately based on your answers above?