Use the information for the question(s) below. Project A - 10,000 Project B - 10,000 Time 0 Time 1 5,000 4,000 Time 2 4,000 3,000 Time 3 3,000 10,000 If WiseGuy Inc. uses payback period rule to choose projects, which of the projects (Project A or Project B) will rank highest? O A. Project A B. Project B C. Project A and Project B have the same ranking. D. Cannot calculate a payback period without a discount rate.

Use the information for the question(s) below. Project A - 10,000 Project B - 10,000 Time 0 Time 1 5,000 4,000 Time 2 4,000 3,000 Time 3 3,000 10,000 If WiseGuy Inc. uses payback period rule to choose projects, which of the projects (Project A or Project B) will rank highest? O A. Project A B. Project B C. Project A and Project B have the same ranking. D. Cannot calculate a payback period without a discount rate.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 15P

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Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
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Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two projects, A or B, is better in terms of internal rate of return?
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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Hello, can you please answer this problem with excel and formulas, thank you! Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 10 percent. Year Project F Project G 0 –$135,000 –$205,000 1 60,000 40,000 2 50,000 55,000 3 60,000 90,000 4 55,000 120,000 5 50,000 135,000 a. Calculate the payback period whitout PV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 8,732.16) b. Calculate the NPV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 8,732.16)c. Which project, if any, should the company accept? just write the letter.
I need a detailed explanation to solve this problem. A company has the following mutually exclusive projects. Year Project-A Project-B 0 $26,000 $29,000 1 $15,000 $16,000 2 $11,500 $10,000 3 $3,500 $11,500 a)- Calculate the payback period for each project. - How many years for Project A - How many years for Project B b)-If the company's payback period is two years, which of the project should you chose? * Project A or Project B * Both Projects or Neither Projects c)- If the discount rate is 13%, what is the NPV for each Project? d) If the discount rate is 13%, which project should the company chose? * Project A or Project B * Both Project s or Neither Project
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