Split is considering two investment alternatives with the following cash flows: Option A: Year 1 $ 20,000, Year 2 $21,000, Year 3 $18,500, Year 4 $6,000 Option B: Year 1 $20,000, Year 2 $ 25,000, Year 3 $15,000, Year 4 $4,000, Year 5 $1,000 Both options cost $25,000. The cost of capital is 12%. What is the NPV of the most desirable option?
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A: Referencehttps://www.sciencedirect.com/science/article/pii/B9780750661362500740
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- You are considering a project with an initial cost of $59,700 and annual cash inflows of $10,905 in perpetuity. What discount rate, when applied to this project, will result in a profitability index of 1.00? Options 17.35% 17.81% 18.27% 18.72% 19.18%Quick Flick is considering two investments. Both require a net investment of $120,000 and have the following net cash flows:Year Project X Project Y1 $50,000 $25,0002 40,000 45,0003 30,000 50,0004 25,000 60,0005 20,000 70,000Quick uses a combination of the net present value approach and the payback approach to evaluate investment alternatives. The firm uses a discount rate of 14 percent and requires that all projects have a payback period no longer than 3 years. Which investment or investments should Quick accept? a.only Project X b.only Project Y c.both projects X and Y d.reject both projectsYou are analyzing two proposed capital investments with the following cash flows: Year 0 1 2 3 4 Project X - $20,000 12,830 5,560 5,560 2,020 Project Y - $20,000 The Pl for project X 7,070 7,070 7,070 7,070 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 4 decimal places, e.g. 1.2527.) Which project, or projects, should be accepted if you have unlimited funds to invest? If you have unlimited funds you should invest in and the PI for project Y is Which project should be accepted if they are mutually exclusive? If they are mutually exclusive you should invest in
- Consider the following two investment alternatives:The firm's MARR is known to be 15%.(a) Compute the PW (15%) for Project A. (b) Compute the unknown cash flow X in years 2 and 3 for Project B.( c) Compute the project balance (at 15%) for Project A at the end of year 3.( d) If these two projects are mutually exclusive alternatives, which project would you select?Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given next. The MARR is 20% per year. At the conclusion of the useful life, the investment will be sold. A decision-maker can select one of these alternatives or decide to select none of them. Make a recommendation using the PW method.Consider the following two mutually exclusive projects: If the discount rate is 10%, what are the NPV of Project A and the IRR of Project B? Cash Flows ($) Project C0 C1 C2 C3 A -90 +60 +50 0 B -100 0 0 +140 Multiple Choice Then NPV for project A is $5.9 and the IRR for project B is 11.9% Then NPV for project A is $8 and the IRR for project B is 9% Then NPV for project A is $20 and the IRR for project B is 11.9% Then NPV for project A is $5.9 and the IRR for project B is 11.9%
- An investor is looking at two projects, project A and B. Project A pays $44,000 with prob. 0.7 and $14,000 with prob. 0.3, while project B pays $32,000 with prob. 0.5 and $X with prob. 0.5. If the two projects have the same expected value, what is X? O $35,000 O $36,000 O $37,000 O $38,000Consider the two mutually exclusive investment projects given in the table below for which MARR = 12%. On the basis of the IRR criterion, which project would be selected under an infinite planning horizon with project repeatability likely? Click the icon to view the cash flows for the investment projects. The rate of return on the incremental investment is 42.3 %. (Round to one decimal place.) Which project would be selected on the basis of the IRR criterion? Choose the correct answer below. Project B Project A More Info (Click on the following icon in order to copy its contents into a spreadsheet.) Net Cash Flow Project A - $4,000 n 0 1 2 3 IRR 2,500 4,000 4,000 62.18% Project B - $10,500 9,500 9,500 50.57% XBloombish Corp. Inc. is considering a project that has cash flows of -$152,000, $60,800, $61,300, and $75,000 for Years 0 to 3 respectively. The required rate of return is 14 percent. Based on the internal rate of return ________ percent, you should ___________ the project. Select one: A. 12.95 percent; accept B. 14.67 percent; accept C. 13.67 percent; reject D. 14.67 percent; reject
- Suppose your firm is considering Investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 10 percent and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively. Time Cash Flow Multiple Choice $-24013, reject -1,000 Use the NPV decision rule to evaluate this project; should it be accepted or rejected? $835 86, accept $759 87, accept $1,835.86 accept 2 400 200 3 600 4 600 5 200 6 600consider the following two investments with the cashfow as shown. given the project are mutually exclusive, use Incremental-Investement Analysis to determine which of the two projects you should select. Given that the MARR required by management is 12%.Please show calculations and stepwise, dont copy pls. Investment options A and B are equally risky and have identical initial costs. Each investment will produce cash inflows of $20,000. Option A will pay five annual payments, starting in 1 year, of $4,000 each. Option B will pay $8,000 the first year followed by four annual payments of $3,000 each. Which one of the following statements is correct given these two investment options? Assume a positive rate of return. A) Neither investment should be undertaken. B) Option A is the better investment. C) Option B has a higher net present value. D) Option B has a lower future value at Year 5. E) Both options are of equal value..
