a. Consider the following mutually exclusive project below. Whichever project chosen, a 15 percent return is required on the investment. Year Cash Flow (A) Cash Flow (B) -RM300,000 -RM40,000 1 RM20,000 RM19,000 RM50,000 RM12,000 3 RM50,000 RM18,000 4 RM390,000 RM10,500 i. Indicate which investment is chosen by applying the discounted payback criterion. th x9 ii. Indicate which investment is chosen using the NPV criterion. the' iii. Indicate which investment is chosen according to the probability index. 2.
Q: Consider the following cash flows of two mutually exclusive projects for Dubai Company. Assume the…
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: Consider two mutually exclusive projects – Project X and Project Y with identical initial outlays of…
A: Net present value (NPV):The net present value is a technique used for making the investment…
Q: Comparing Investment Criteria [LO1, 2, 3, 5, 7] Consider the following two mutually exclusive…
A: Following is the answer to the given question
Q: Consider the following mutually exclusive project below. Whichever project chosen, a 15 percent…
A: Capital budgeting is the process a business undertakes to evaluate potential major projects or…
Q: Compute Discounted Payback Period, Net Present Value and Profitability Index of a project which…
A: Discounted Payback Period is one of the capital budgeting techniques. In this technique, the cash…
Q: A firm evaluates all of its projects by applying the IRR rule. Year Cash Flow -$157,300 74,000…
A: Answer - 1: The IRR is the interest rate that makes the NPV of the project equal to zero. So,…
Q: 00 12,000 3 50,000 18,000 4 390,000…
A: Cash flow analysis is important for the business since it allows the business to assess the amount…
Q: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow…
A: Formulas:
Q: Better plc is comparing two mutually exclusive projects, whose details are given below. The…
A: The process of evaluating potential investments and projects is known as capital budgeting. It…
Q: Calculate the payback period, net present value, and internal rate of return for Project A
A: Capital budgeting are the methods used for evaluating the potential projects or investment…
Q: A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the…
A: Internal Rate of Return: The internal rate of return (IRR) is a discounting cash flow technique…
Q: Consider the following two mutually exclusive projects: Cash Flow (B) Cash Flow (A) $-300,000 20,000…
A: Net present value (NPV) is the difference between the present value of cash inflows and the present…
Q: Two mutually exclusive investment projects have the following forecasted cash flows: Year A B…
A: IRR is the internal rate of return a project generates in its lifetime expressed in annual terms. It…
Q: Consider the following two mutually exclusive projects: Cash Flow (A) $-300,000 20,000 50,000 50,000…
A: Formulas: Payback period = Last period with negative cashflows + Last negative cumulative cash…
Q: A company is considering two projects. The discount rate is 10 percent, and the projects' cash flows…
A: NPV =Present Value of Future Cash Flows - Initial Investment IRR is the rate at which Present Value…
Q: Whichever project Consider the following mutually exclusive project below. chosen, a 15 percent…
A: NPV is the present value of future cash flows. It is a tool which is used to decide whether the…
Q: The net cash flows of two alternative projects that require an investment of 120,000 TL are as…
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Consider two mutually exclusive projects – Project X and Project Y with identical initial outlays of…
A: Profitability Index = Present value of future cash flows / Initial investment Now to find the…
Q: You are considering two mutually exclusive projects with the following cash flows. The discount rate…
A: Pay back period is the amount of years required to recover the initial investment of the project and…
Q: The Whenworth Corporation is trying to choose between the following two mutually exclusive design…
A: Introduction Net Present Value(NPV): Net present value is a tool of Capital budgeting to analyze…
Q: A company is considering mutually exclusive projects. The free cash flows associated with these…
A: The capital budgeting is a tool or technique that helps to evaluate the profitability of the project…
Q: The required rate of return on these projects is 11%. They are of equal risk. What is each…
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: a) Calculate the net present value of the investment. Please interpret with the reasons whether the…
A: Capital budgeting is a method used for finding the profitability of investment proposals. It…
Q: Consider the following two mutually exclusive projects: Year Cash Flow Cash Flow B 0…
A: NPV (Net Present Value)NPV is the method of finding the worth of an investment or project by…
Q: Given the following cash +pws for project X and project Y, Year Project X Project Y -62000 -105000 1…
A: GIVEN, year X Y 0 -62000 -105000 1 27000 10000 2 13500 18000 3 11000 22000 4 10000…
Q: 1. The Bolster Company is considering two mutually exclusive projects: Year Cash Flow A Cash Flow B…
A: given, year A B 0 -100000 -100000 1 31250 0 2 31250 0 3 31250 0 4 31250 0 5 31250…
Q: Consider two investments with the following sequences of cash flows: (a) Compute the IRR for each…
A: a) Working note:
Q: A company is considering two projects. The discount rate is 10 percent, and the projects' cash flows…
A: Using the NPV and IRR function in Excel
Q: If you apply the IRR decision rule, which investment will you choose? Why?
A: Internal rate of return is the rate at which the net present value of cash flows of the project…
Q: Compute Discounted Payback Period, Net Present Value and Profitability Index of a project which…
A: Discounted PB Period refers to time period required to fully recover initial outlay from PV of…
Q: (100) (a) Construct the NPV profiles for Projects P and Q. (b) What is the IRR of each project?…
A: Calculation of NPV Project q Year Cash inflow Discounting factor 10% Amount 1 200 .9090…
Q: Consider two mutually exclusive projects – Project X and Project Y with identical initial outlays of…
A: The capital budgeting is a technique that helps to analyze the profitability of the project and…
Q: Better plc is comparing two mutually exclusive projects, whose details are given below. The…
A: The capital budgeting techniques help us to decide which project should be undertaken. The NPV and…
Q: Consider the two mutually exclusive investment projects given in the table below for which MARR =…
A: Capital Budgeting is the process of assessing long-term decisions made by management in order to…
Q: Assume two mutually exclusive projects have the estimated net incremental after-tax cash flows shown…
A: Capital budgeting is the process that a business uses to determine which proposed fixed asset…
Q: 21
A: Profitability index is the ratio between the initial investment made and the present value of future…
Q: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0…
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…
Q: K.Broni Company is considering two mutually exclusive investments. Project P and Project The…
A: NPV =Present value of all inflows-present value of all outflows IRR is a rate of discount/return at…
Q: a. Consider the following mutually exclusive project below. Whichever project chosen, a 15 percent…
A: Capital budgeting indicates the evaluation of the profitability of possible investments and projects…
Q: 25
A: PROJECT B Year Cash flows 0 (300,000.00) 1 150,000.00 2 150,000.00 3…
Q: Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0…
A: Net Present Value(NPV) is excess of present value(PV) of cash inflows over initial outlay of…
Step by step
Solved in 4 steps with 6 images
- 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?a. Consider the following mutually exclusive project below. Whichever project chosen, a 15 percent return is required on the investment. Year Cash Flow (A) Cash Flow (B) -RM300,000 -RM40,000 1 RM20,000 RM19,000 RM50,000 RM12,000 3 RM50,000 RM18,000 4 RM390,000 RM10,500 i. Indicate which investment is chosen by applying the discounted payback criterion. Indicate which investment is chosen using the NPV criterion. ii. iii. Indicate which investment is chosen according to the probability index. 2.Consider the following two mutually exclusive projects: YEAR CASH FLOW (A) CASH FLOW (B)0 -$300,000 -$39,0001 20,000 18,0002 70,000 12,0003 80,000 18,0004 400,000 19,000 Whichever project you choose, if any, you require a 15 percent return on your investment.i) If you apply the payback period (PBP) criterion, which investment will you choose? Why?ii) If you apply the net present value (NPV) criterion, which investment will you choose? Why?iii) If you apply the profitability index (PI) criterion, which investment will you choose? Why?iv) If you apply the internal rate of return (IRR) criterion, which investment will you choose?Why?v) Based on your answers in (i) through (iv), which project will you finally…
- Consider the following two mutually exclusive projects: Year Cash flow project A (RM) 0 1 2 3 4 -54,000 12,700 23,200 27,600 46,500 Cash flow Project B (RM) -23,000 11,600 11,200 12,500 6,000 Whichever project you choose, if you require a 14 percent return on your investment i) Compute the payback period for both project ii) Compute the Net Present Value (NPV) for both projects. iii) Which project do you prefer and which? Fully explain the result of your analysisConsider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$ 15,456 5,225 8,223 13,013 8,705 0 1 234 -$ 276,363 26,400 51,000 57,000 402,000 Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A? Payback period b. What is the payback period for Project B? Payback period c. What is the discounted payback period for Project A? Discounted payback periodConsider the following two mutually exclusive projects:Year Cash Flow (X) Cash Flow (Y)0 -$365,000 -$38,0001 25,000 16,0002 65,000 12,0003 65,000 17,0004 425,000 15,000Whichever project you choose, if any, you require a 13 percent return on your investment. i. Which investment will you choose if you use the payback decision criteria? Justify your answer.ii. Which investment will you choose if you use the NPV decision criteria? Justify your answer.iii. Which project will you choose ultimately based on your answers above?
- Whichever project Consider the following mutually exclusive project below. chosen, a 15 percent return is required on the investment. Year Cash Flow (A) Cash Flow (B) -RM300,000 -RM40,000 1 RM20,000 RM19,000 RM50,000 RM12,000 3 RM50,000 RM18,000 4 RM390,000 RM10,500 Indicate which investment is chosen by applying the discounted payback criterion. i. ii. Indicate which investment is chosen using the NPV criterion. iii. Indicate which investment is chosen according to the probability index.Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$ 54,000 -$ 23,000 1 12,700 11,600 2 23,200 11,200 3 27,600 4 46,500 12,500 6,000 Whichever project you choose, if any, you require a rate of return of 14 percent on your Investment. If you apply the payback criterion, you will choose Project NPV criterion, you will choose Project If you apply the IRR criterion, you will choose Project If you choose the profitability Index criterion, you will choose Project Based on your first four answers, which project will you finally choose? If you apply theConsider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$29,000 −$29000 1 14,400 4,300 2 12,300 9,800 3 9,200 15,200 4 5,100 16,800 a) What is the Internal Rate of Return (IRR) for each of these projects? b) Using the IRR decision rule, which project should the company accept? c) If the required return is 11 percent, what is the Net Present Value (NV) for each of these projects? d) Using the NPV decision rule, which project should the company accept? e) Why do you think the NPV and IRR rules do not agree on same project approval/rejection direction?
- Consider cash flows for the following investment projects (MARR = 15 %). Suppose that projects are mutually exclusive. Which project would you select based on AE criterion? Project A -3000 Project B -3500 ProjectC 4000 1400 1100 1500 2. 1650 1000 1500 3. 1300 1000 1800 1800 4 750 1000Consider the cash flows for the investment projects given in Table. Assume that the MARR = 10%. (a) Suppose A, B, and C are mutually exclusive projects. Which project would be selected on the basis of the IRR criterion (b) Assume that projects C and È are mutually exclusive. Using the IRR criterion, which Project would you select? Net Cash Flow A В C D E -4,250 3,200 2,850 -4,250 1,500 3,250 1,600 1,200 -4,250 2,850 -4,850 2,100 2,100 2,100 2,100 2,500 1 -835 2,900 1,050 500 2 -835 3 800 -835 4 300 -835Consider the cash flows for the investment projects given in Table. Assume that the MARR = 10%. (a) Suppose A, B, and C are mutually exclusive projects. Which project would be selected on the basis of the IRR criterion? (b) Assume that projects C and E are mutually exclusive. Using the IRR criterion, which Project would you select?. Net Cash Flow B D. E -4,850 2,100 2,100 2,500 4,250 3,200 2,850 800 300 4,250 4,250 2,850 2,900 1,050 500 -835 -835 -835 -835 1,500 3.250 1,600 1,200 2,100 2,100