Time O Time 1 Time 2 Time 3 Project A -10,000 5,000 4,000 3,000 If WiseGuy Inc is choosing one of the above mutually exclusive projects (Project A or Project B), given a discount rate of 7%, which should the company choose? Both projects both have positive NPV. ONeither project both have negative NPV. O Project A O Project B Project B -10,000 4,000 3,000 10,000
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- Consider the following teo mutually exclusive projects X 20600, 9000 9400 8950 Y 20600 10400 7950 8850 calculate the irr for each project, what is the crossover rate, what is the npv of the projects x and y with a discount rate of 0, 15, and 25%Project A - 10,000 Project B - 10,000 4000 3000 10,000 5000 4000 3000 A. Project A B. Project B C. Neither project, - both have a NPV of 0. Project C - 10,000 3000 4000 5000 Time 0 Time 1 Time 2 Time 3 If WiseGuy Inc is choosing one of the above mutually exclusive projects (Project A or Project B), given a discount rate of 8%, which should the company choose? D. Both projects, - both have positive NPV. E. Neither project,- both have negative NPV. Project D - 10,000 4000 4000 4000 Project E - 10,000 2000 6000 10,000Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site. Gardial Fisheries is considering two mutually exclusive investments. The projects expected net cash flows are as follows: a. If each projects cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? b. Construct NPV profiles for Projects A and B. c. What is each projects IRR? d. What is the crossover rate, and what is its significance? e. What is each projects MIRR at a cost of capital of 12%? At r = 18%? (Hint: Consider Period 7 as the end of Project Bs life.) f. What is the regular payback period for these two projects? g. At a cost of capital of 12%, what is the discounted payback period for these two projects? h. What is the profitability index for each project if the cost of capital is 12%?
- Answer this question as it is pertaining to two MUTUALLY EXCLUSIVE projects on the following figure. Given r=6%, which project would you choose if you decide to use the internal rate of return (IRR) as the criterion? Group of answer choices Project A Project B Neither EitherProject A Time 0 - 10,000 Time 1 5,000 Time 2 Time 3 4,000 3,000 Project B - 10,000 4,000 3,000 10,000 If WiseGuy Inc. is choosing one of the above mutually exclusive projects (Project A or Project B), given a discount rate of 8%, which should the company choose? OA. Project A OB. Project B OC. Neither project-both have negative NPV. OD. Both projects-both have positive NPV.Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign. Discount Rate NPV Project A NPV Project B 0% $ $ 5 $ $ 10 $ $ 12 $ $ 15 $ $ 18.1 $ $ 23.01 $ $ The exel sheet is down below for the entirre question! Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations. % What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A: % Project Acceptance: WACC 13.00% Accept #N/A WACC 18.00% NPVA $2.66 NPVB $53.19 Accept #N/A NPV Profiles:…
- Consider two project alternatives, project I and project II, with their payoffs and their associated probabilities outlined in the following table: Project I Project II Payoff 10 15 20 Probability 0.1 0.8 0.1 Payoff 1. Compute RRI for each project; 2. Would you select project I or project II? Why. 5 10 14 Probability 0.2 0.3 0.5PRINTED NAME _____________________________________________ Project X Project Y PB (payback) DPB (Discounted Payback) NPV $ PI IRR% MIRR% EAA (NUS) $ CROSSOVER RATE % NPV $ (using crossover rate) If the projects are INDEPENDENT, which would you choose? WHY? _____________________________________________________________ If the projects are MUTUALLY EXCLUSIVE, which would you choose? WHY? _____________________________________________________________ When you would be INDIFFERENT between the projects? WHY? _____________________________________________________________ SIGNATURE _____________________________________________________Choices for last three requirements 3. What is the approximate IRR of Project A? a. 28% b. 18% c. 24% d. 21% 4. What is the approximate IRR of Project B? a. 17% b. 14% c. 20% d. 22% 5. if the crossover rate is exactly 9.31% which of the following discount rate would have a conflict in the decision making (between NPV and IRR) assuming the projects are mutually exclusive? a. 7% b. 11%
- Consider the following two projects: Cash flows Project A Project B C0�0 −$ 240 −$ 240 C1�1 100 123 C2�2 100 123 C3�3 100 123 C4�4 100 a. If the opportunity cost of capital is 8%, which of these two projects would you accept (A, B, or both)? b. Suppose that you can choose only one of these two projects. Which would you choose? The discount rate is still 8%. c. Which one would you choose if the cost of capital is 16%? d. What is the payback period of each project? e. Is the project with the shortest payback period also the one with the highest NPV? f. What are the internal rates of return on the two projects? g. Does the IRR rule in this case give the same answer as NPV? h. If the opportunity cost of capital is 8%, what is the profitability index for each project? i. Is the project with the highest profitability index also the one with the highest NPV? j. Which measure should you use to choose between the projects?Consider three mutually exclusive alternatives: Year Investment X Investment Y Do Nothing -$200 -$145 1 +$62.5 +$47.5 +$62.5 +$47.5 3 +$62.5 +$47.5 4 +$62.5 +$47.5 Which alternative should be selected: (clue: try I= 9%,11%,12%) (a) If the Minimum Attractive Rate of Return (MARR) equals 3%? (b) If MARR = 6%? %3D (c) If MARR = 10%? (d) If MARR = 14%? 2.Whispering Inc. now has the following two projects available: Project Initial CF After-tax CF1 After-tax CF2 1 2 PMT1 PMT2 $ $ -11,634.42 Project 1 -3,290.48 5,300 3,800 Assume that RF = 5.1 percent, risk premium = 10.6 percent, and beta = 1.2. Use the EANPV approach to determine which project Whispering Inc. should choose if they are mutually exclusive. (Round cost of capital and final answers to 2 decimal places, e.g.17.35% or 2,513.25.) 1673.12 1479.74 6,200 should be chosen. 3,200 After-tax CF3 9,600
