NPV & IRRRefer to the scenario above.The project(s) you select may vary depending on the WACC and whether theprojects are independent or mutually exclusive.Which statement is INCORRECT?If the projects are independent and the WACC is 11.0%, both projects A and B areacceptable.If the projects are independent, Project A would be acceptable if the WACC is17%, but Project B would not.If a project's NPV is negative, the project cannot be accepted.If the projects are mutually exclusive and the WACC is 11.0%, only project B isacceptable.If the projects are mutually exclusive and the WACC is 6.0%, only project B isacceptable.

In mutually exclusive projects, only one project can be chosen because selecting one excludes the…

Answered: NPV & IRR Refer to the scenario above.…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 4Q

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a. Explain why the IRR may contradict the ranking of NPV and therfore not recmmeneded to use when choosing among mutually exclusive projects.\ (5 lines) b. Give two possible examples of such projects. (choose realistic projects, or actual projects you know of) Exaplain your choice?
Please answer the questions in the image and the ones below. Thank you! 1. Assuming the projects are independent, which one(s) would you recommend? A. Both projects would be accepted since both of their NPV's are positive B. Both projects would be rejected since both of their NPV's are negative C. Only Project M would be accepted because IRR(M)>IRR(N) D. Only Project N would be accepted because NPV(N)>NPV(M) E. Only Project M would be accepted because NPV(M)>NPV(N) 2. If the projects are mutually exclusive, which would you recommend? A. If the projects are mutually exclusive, the project with the highest NPV is chosen. Accept Project N B. If the projects are mutually exclusive, the project with the highest positive IRR is chosen. Accept Project M C. If the projects are mutually exclusive, the project with the highest positive MIRR is chosen. Accept Project M D. If the projects are mutually exclusive, the project with the shortest packback period is chosen. Accept project M.…
When faced with a set of independent projects, one should select (choose the best answer) A. all projects with an IRR greater than the hurdle rate or a Pl greater than one. B. all projects with a positive NPV or a Pl greater than the one. all projects with a positive NPV or an IRR greater than the hurdle rate or a PI greater than one. C.all projects with a positive NPV or an IRR grcater than the hurdle rate. D. all projects with a Pl greater than one, all projects with a positive NPV E. all projects with an IRR greater than the hurdle rate
The IRR of normal Project X is greater than the IRR of normal Project Y, and both IRRS are greater than zero. Also, the NPV of X is greater than the NPV of Y at the cost of capital. If the two projects are mutually exclusive, Project X should definitely be selected, and the investment made, provided we have confidence in the data. Put another way, it is impossible to draw NPV profiles that would suggest not accepting Project X. Group of answer choices True False
When faced with a set of independent projects, one should select (choose the best answer) O all projects with an IRR greater than the hurdle rate O all projects with a positive NPV O all projects with a Pl greater than one. O all projects with a positive NPV or an IRR greater than the hurdle rate. O all projects with an IRR greater than the hurdle rate or a Pl greater than one. O all projects with a positive NPV or a PI greater than the one. O all projects with a positive NPV or an IRR greater than the hurdle rate or a Pl greater than one.
29....When using the NPV method the decision making rationale includes the following (select all that apply): a.If projects are mutually exclusive, accept the project with the highest positive NPV. b.If projects are independent, accept if the project NPV<0. c.If projects are independent, accept if the project NPV>0 d.If the projects are mutually exclusive, accept the project with lowest NPV.
Free Spirit's decision to accept or reject this project is independent of its decisions on other projects. Based on the project's PI, the firm should the project. By comparison, the net present value (NPV) of this project is in the project because the project, On the basis of this evaluation criterion, Free Spirit should increase the firm's value. When a project has a P1 greater than 1.00, it will exhibit an NPV Projects with Pls 1.00 will exhibit negative NPVs. ; when it has a PI of 1.00, it will have an NPV equal to $0.
When faced with a set of independent projects, one should select (choose the best answer) a. all projects with a positive NPV or an IRR greater than the hurdle rate or a PI greater than one. b. all projects with a positive NPV or an IRR greater than the hurdle rate. c. all projects with an IRR greater than the hurdle rate d. all projects with an IRR greater than the hurdle rate or a PI greater than one. e. all projects with a positive NPV f. all projects with a positive NPV or a PI greater than the one. g. all projects with a PI greater than one.
A financial analyst is evaluating the following projects, which are mutually exclusive, meaning that only one of them can be chosen. Based on financial theory and the NPV criterion, which one of these projects should be chosen over the other three? Time A C D -26,000 -7,200 -14,500 -19,600 8,100 11,900 8,100 2,360 8.600 1,150 10,000 2,120 5,700 800 11,100 11,00O0 4,200 850 1,130 9,800 12,480 9,700 830 11,600 Discount 13.9% 13.9% 13.9% 13.9% Rate O Project A O Project B O Project C O Project D O12 345
Consider three mutually exclusive projects: Project A, Project B and Project C. The IRR of these projects are given as: Project A 0.3 Project B 0.25 IRR Which of the following is correct? O only Project C will be chosen. O all three projects will be rejected. O all three projects will be chosen. O both Project A and B will be chosen. O no decision can be made. Project C 0.17
When faced with a set of independent projects, one should select (choose the best answer) O all projects with a positive NPV or an IRR greater than the hurdle rate. O all projects with an IRR greater than the hurdle rate O all projects with a positive NPV O all projects with a positive NPV or an IRR greater than the hurdle rate or a PI greater than one. O all projects with a positive NPV or a PI greater than the one. O all projects with a Pl greater than one. O all projects with an IRR greater than the hurdle rate or a Pl greater than one.
b) Using data provided below, compute appropriate values and fill the table below to help identify the least risky and most risky project among alternatives A, B and C using appropriate criteria. Project EV D D2 Var St. dev Coef.0f Var TT 12 0.2 A 18 0.7 28 0.1 10 0.3 В 22 0.6 32 0.1 11 0.1 C 21 0.8 31 0.1 Where n denotes the profit, P is the probability, EV stand for Expected value, D is the Deviation, D$ denote the deviation square, St. dev is the standard deviation and finally Coef.of Var is the coefficient of variation.

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