A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below: Years 1 3 4 S -1,100 900 350 50 10 L -1,100 300 500 850 The company's cost of capital is 12 percent, and it can get an unlimited amount of capital at that cost. What is the NPV and regular IRR (not MIRR) of the projects?

A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below: Years 1 3 4 S -1,100 900 350 50 10 L -1,100 300 500 850 The company's cost of capital is 12 percent, and it can get an unlimited amount of capital at that cost. What is the NPV and regular IRR (not MIRR) of the projects?

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 13P

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A Company is considering two mutually exclusive projects whose expected net cash flows are in the table below. The company's WACC is 15%. What is the NPV for Project Y? What is the NPV for Project Z? What is the IRR for Project Y? What is the IRR for Project Z? Which Project, if any, should you choose? Time Project Y Project Z 0 S (420.00) S(950.00) 1 S(572.00) $270.00 2 S(189.00) S270.00 3 S(130.00) $270.00 4 $1,300.00 $270.00 5 $720.00 $270.00 6 $980.00 $270.00 7 $(225.00) $270.00 Pleaseshow in excel I think im getting the wrong values
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Better plc is comparing two mutually exclusive projects, whose details are given below.The company’s cost of capital is 12 per cent.Project A Project B£m £mYear 0 (150) (152)Year 1 40 80Year 2 50 80Year 3 60 50Year 4 60 40Year 5 80 30(a). Using the net present value method, which project should be accepted?(b). Using the internal rate of return method, which project should be accepted?(c). If the cost of capital increases to 20 per cent in year 5, would your advice change?
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A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below: Years 0 1 2 3 4 S -1,100 900 350 100 10 L -1,100 0 300 550 850 The company's cost of capital is 12 percent, and it can get an unlimited amount of capital at that cost. The cutoff payback period is two years. Which project should the company choose based on payback period and discounted payback period? Question 5 options: Based on payback, choose project L; based on discounted payback, also choose L. Based on payback, choose project L; based on discounted payback, choose neither. Based on payback, choose project S; based on discounted payback, also choose S. Based on payback, choose project S; based on discounted payback, choose neither.
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