For the projects given in the table below to: • Classify the projects into simple investment or non-simple investment. Decide if project A is accepted or rejected based on the IRR criterion, at MARR of 20%. If projects C and D are mutually exclusive projects, determine which project is more economical at MARR of 70%. PROJECT CASH FLOW SR A C -4 000 -4 000 -125 000 -125 000 8 000 760 30 000 20 000 2 -3 000 4 000 30 000 40 000 3 120 000 130 000 NOTE: The general solution of a quadratic equation (aX? + bX +c = 0) is -bt vb2 - 4ac

For the projects given in the table below to: • Classify the projects into simple investment or non-simple investment. Decide if project A is accepted or rejected based on the IRR criterion, at MARR of 20%. If projects C and D are mutually exclusive projects, determine which project is more economical at MARR of 70%. PROJECT CASH FLOW SR A C -4 000 -4 000 -125 000 -125 000 8 000 760 30 000 20 000 2 -3 000 4 000 30 000 40 000 3 120 000 130 000 NOTE: The general solution of a quadratic equation (aX? + bX +c = 0) is -bt vb2 - 4ac

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 19PROB

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Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of 150,000 and will operate for five years. The cash flows associated with these projects are as follows: Statens required rate of return is 10%. Using the net present value method and the present value table provided in Appendix A, which of the following actions would you recommend to Staten? a. Accept Project X and reject Project Y. b. Accept Project Y and reject Project X. c. Accept Projects X and Y. d. Reject Projects X and Y.
Net present value method, present value index, and analysis for a service company First United Bank Inc. is evaluating three capital investment projects by using the net present value method. Relevant data related to the projects are summarized as follows: Instructions 1. Assuming that the desired rate of return is 15%, prepare a net present value analysis for each project. Use the present value table appearing in Exhibit 2 of this chapter. 2. Determine a present value index for each project. (Round to two decimal places.) 3. Which project offers the largest amount of present value per dollar of investment? Explain.
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