Two projects have an identical "Net Present Value' of $9,000. Are both projects equal in desirability?
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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?Project A has a required return of 9.2 percent and cash flows of -$87,000, $32,600, $35,900, and $43,400 for Years 0 to 3, respectively. Project B has a required return of 12.7 percent and cash flows of -$85,000, $14,700, $21,200, and $89,800 for Years 0 to 3, respectively. Which project(s) should you accept based on net present value if the projects are mutually exclusive? Select one: A. Accept either one, but not both B. Accept both projects C. Accept Project A and reject Project B D. Reject Project A and accept Project B E. Reject both projectsA company is considering two projects. The discount rate is 10 percent, and the projects’ cash flows would be: Years 0 1 2 3 Project A -$700 $500 $300 $100 Project B -$700 $100 $300 $600 Calculate the projects’ NPVs and IRRs. If the two projects are independent, which project(s) should be chosen? If the two projects are mutually exclusive, which project should be chosen?
- A company is considering two projects. The discount rate is 10 percent, and the projects’ cash flows would be: Years 0 1 2 3 Project A -$700 $500 $300 $100 Project B -$700 $100 $300 $600 Calculate the projects’ NPVs. If the two projects are independent, which project(s) should be chosen? If the two projects are mutually exclusive, which project should be chosen?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, 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?Given the net present value (NPV) of Project A is -$500,000, Project B is $200,000 and Project C is $250,000. Which of the project(s) can be accepted?
- Using the net present value method, the present value of cash inflows for Project A is P44,000 and the present value of cash inflows of Project B is P24,000. If Project A and Project B require initial investments of P40,000 and P20,000, respectively, and have the same useful life, what is the project that should be accepted assuming the projects are mutually exclusive projects?Consider two mutually exclusive projects – Project X and Project Y with identical initial outlays of RM90,000 and depreciable lives of 5 years. Project X is expected to produce free cash flows of RM32,787 each year. Project Y is expected to generate a single after-tax net cash flow of RM223,880 in year 5. The cost of capital is 15 percent. Required:(a) Calculate the net present value for each projectConsider two mutually exclusive projects – Project X and Project Y with identical initial outlays of RM90,000 and depreciable lives of 5 years. Project X is expected to produce free cash flows of RM32,787 each year. Project Y is expected to generate a single after-tax net cash flow of RM223,880 in year 5. The cost of capital is 15 percent. Required:(a) Calculate the net present value for each project (b) Determine the internal rate of return for each project.(c) Compute the payback period for each project. (d) In a situation where there is capital rationing, calculate the profitability index (PI) for both projects and rank them accordingly. Based on your PI calculations above, identify the problems you foresee in selecting one of the projects. Select the best project based on Capital Budgeting Valuation Techniques above.
- Consider two mutually exclusive projects – Project X and Project Y with identical initial outlays of RM90,000 and depreciable lives of 5 years. Project X is expected to produce free cash flows of RM32,787 each year. Project Y is expected to generate a single after-tax net cash flow of RM223,880 in year 5. The cost of capital is 15 percent.Required:1) Determine the internal rate of return for each project.Explain whether two competing, alternate capital projects are equally desireable if they both generate a positive NPV of $2,000, when using the the Net Present Value method to evaluate the projects.A firm whose cost of capital is 10% is considering two mutually exclusive projects X and Y, the details of which are: Year Project X Project Y Cost X 70 000 Y 70 000 Cash inflows 1 10 000 50 000 2 20 000 40 000 3 30 000 20 000 4 45 000 10 000 5 60 000 10 000 Calculate the following: Net Present Value at 10% for both projects Profitability Index for both projects Internal Rate of Return of the two project
