Project X is very risky and has an NPV of $3 million. Project Y is very safe and has an NPVof $2.5 million. They are mutually exclusive, and project risk has been properly consideredin the NPV analyses. Which project should be chosen? Explain.
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Project X is very risky and has an NPV of $3 million. Project Y is very safe and has an NPV
of $2.5 million. They are mutually exclusive, and project risk has been properly considered
in the NPV analyses. Which project should be chosen? Explain.
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- Project X is very risky and has an NPV of $3 million. Project Y is very safe and has an NPV of $2.5 million. They are mutually exclusive and project risk has been carefully considered in the NPV analyses. Which project should be chosen? ExplainWorldTrans is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone. How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost. WACC: 14.25% 0 1 2 3 4 CFS -$950 $500 $800 $0 $0 CFL -$2,100 $400 $800 $800 $1,000 Group of answer choices $127.87 $95.90 $93.62 $116.46 $0.00Yonan Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone. How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost. WACC: 10.25% 0 1 2 3 4 CFS -$800 $650 $350 $0 $0 CFL -$1,900 $550 $600 $600 $840 Please explain and show calculations.
- Yonan Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone. How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost. WACC: 14.25% 0 1 2 3 4 CFS -$950 $500 $800 $0 $0 CFL -$2,100 $400 $800 $800 $1,000 G $93.62 $95.90 $127.87 $0.00 $116.46Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost.If the decision is made by choosing the project with the higher IRR, how much value will be forgone? UF Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. WACC: 7.75% Year 0 1 2 3 4 CFS ($1,050) $700 $625 CFL ($1,050) $370 $370 $360 $360
- Kosovski Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost. WACC: 10.75% 0 1 2 3 4 CFS -$775 $560 $535 CFL -$775 $315 $315 $315 $315 Please explain the process and provide calculations.Farmer Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and repeatable. Year 0 1 2 3 4 CFS -$900 $800 $600 CFL -$700 $300 $200 $400 $200 WACC: 10% Given the two projects are of different length and both are repeatable, one suggestion is to use the replacement chain approach in evaluation. If this approach is used, which project will you choose? Show the calculations and explain your decision.How do I determine which is the correct answer for this problem? A company estimates that an average-risk project has a WACC of 10 percent, a below-average-risk project has a WACC of 8 percent, and an above-average-risk project has a WACC of 12 percent. Which of the following independent projects should the company accept? a. Project A has average risk and an IRR = 9 percent. b. Project B has below-average risk and an IRR = 8.5 percent. c. Project C has above-average risk and an IRR = 11 percent. d. All of the projects above should be accepted. e. None of the projects above should be accepted. Please answer fast I give you upvote.
- a). You have been assigned the task of evaluating two mutually exclusive projects with the following cash flows: Year Project A Cash Flows Project B Cash Flows 0 $(5,000) $(5,000) 1 1,000 4,500 2 1,500 (1,500) 3 (2,000) 1,000 4 4,000 500 Requirements: The projects are equally risky, and their cost of capital is 12%. You must make a recommendation, and you must base it on the modified IRR. What is the MIRR of the better project? (Show the steps) b). Project J has a cost of $22,000 and is expected to produce benefits (cash flows) of $7,000 per year for 4 years (1-2; 4-5). Project K costs $70,000 and is expected to produce cash flows of $20,000 per year for 4 years (1-2; 4-5), however in year 3, each project has a cash outflow of $5,000 for Project J and $7,000 for Project K. Calculate the two projects’ NPVs, IRRs, MIRRs and PIs assuming a cost of capital of 10%. Which project would be selected, assuming they are mutually…Sexton Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the one with the higher IRR will also have the higher NPV, so no value will be lost if the IRR method is used. WACC: 12.75% 0 1 2 3 4 CFs -$2050 $750 $760 $770 $780 CF L -$4300 $1500 $1518 $1536 $1554 Options: $24.80 $30.25 $22.32 $28.52 $22.57Sexton Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the one with the higher IRR will also have the higher NPV, so no value will be lost if the IRR method is used. WACC: 9.50% 0 1 2 3 4 CFS -$2,050 $750 $760 $770 $780 CFL -$4,300 $1,500 $1,518 $1,536 $1,554 a. $145.46 b. $226.70 c. $228.58 d. $188.91 e. $230.47