A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 4 5 6 Project A Project B 0 -$300 -$400 -Select- 2 + -$387 -$193 -$100 $600 $134 $134 $134 $134 $134 8 1 a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % % Project B: c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: d. From your answers to parts a-c, which project would be selected? Discount Rate 0% % 3 % $ $600 $850 $134 If the WACC was 18%, which project would be selected? 7 -Select- 8 e. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. NPV Project A -$180 $0 NPV Project B

A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 4 5 6 Project A Project B 0 -$300 -$400 -Select- 2 + -$387 -$193 -$100 $600 $134 $134 $134 $134 $134 8 1 a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % % Project B: c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: d. From your answers to parts a-c, which project would be selected? Discount Rate 0% % 3 % $ $600 $850 $134 If the WACC was 18%, which project would be selected? 7 -Select- 8 e. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. NPV Project A -$180 $0 NPV Project B

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A company has a 12% WACC and is considering two mutually exclusive Investments (that cannot be repeated) with the following cash flows: ° 1 2 3 4 5 6 7 Project A Project B -$300 -$400 -$387 $131 -$193 -$100 $600 $131 $131 $131 $600 $850 $131 $131 -$180 $0 a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round Intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: % % c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: % % d. From your answers to parts a-c, which project would be selected? -Select- v If the WACC was 18%, which project would be selected? -Select- ▼ e. Construct NPV profiles for Projects A and B. If an amount is…
A company has a 12% WACC and is considering two mutually exclusive Investments (that cannot be repeated) with the following cash flows: 0 1 2 3 4 5 6 7 + + + + + + ㅓ Project A Project B -$300 -$405 -$387 $133 -$193 -$100 $133 $133 $600 $133 $600 $133 $850 -$180 $133 $0 a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round Intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: % % c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: % % d. From your answers to parts a-c, which project would be selected? -Select- If the WACC was 18%, which project would be selected? -Select- e. Construct NPV profiles for Projects A and B. If an…
Consider the following projects: Cash Flows ($) Project D E CO00 C101 -11,700 23,400 -21,700 37,975 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 12%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose?
A company has an 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 -Select- 2 3 7 + Project A -$387 -$193 -$100 $600 $600 $850 -$300 -$405 1 -$180 $0 Project B $131 $131 $131 $131 $131 $131 a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ % Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: d. From your answers to parts a-c, which project would be selected? % 4 % % 5 6 If the WACC was 18%, which project would be selected? -Select- e. Construct NPV profiles for Projects A and B. If an amount is…
Compute the PI statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent. Time: 0 1 2 3 4 5 Cash flow: −250 75 0 100 75 50 Multiple Choice −0.0977 percent, reject −9.77 percent, reject −24.41 percent, reject 24.41 percent, accept
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A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2 3 4 6 7 + Project -$300 -$387 -$193 -$100 $600 $600 $850 -$180 A Project -$400 $131 $131 $131 $131 $131 $131 $0 В a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % d. From your answers to parts a-c, which project would be selected? -Select- If the WACC was 18%, which project would be selected? -Select- e. Construct NPV profiles for Projects A and B. If an amount is…
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Consider the following two mutually exclusive investment projects:Project Cash Flowsn A B 0 -$4,000 -$8,5001 $400 $11,5002 $7,000 $400Assume that the MARR = 15%.(a) Using the NPW criterion, which project would you select?(b) On the same chart, sketch the PW(i) function for each alternative fori = 0% and 50%. For what range of i would you prefer Project B?
Your division is considering two projects with the following cash flows (in millions): 0 1 2 3 Project A -$27 $13 $17 $8 Project B -$25 $14 $11 $2 What are the projects' NPVs assuming the WACC is 5%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.Project A: $ millionProject B: $ million What are the projects' NPVs assuming the WACC is 10%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.Project A: $ millionProject B: $ million What are the projects' NPVs assuming the WACC is 15%? Enter your answer in millions. For example, an answer of $10,550,000…

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