Alberta Inc. is considering investing in two projects, each of which has an initial investment requirement of \( \S 100,000 ). Both A and B are "normal" risk for the company. A has a net present value of \(\$ 25,000 ). B has a net present value of \(\$ 20,000 \). None of the answers provided \(A) and \(B\) are equally valuable. \(A) is better than \(B) because it has a higher net present value and the same risk level. \(B\) is better than \(A \) because of the risk. There is insufficient information to make a rational choice between A and B.
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- Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 7.00% 0 1 3 CFS -$1,100 $375 $375 $375 $375 CFL -$2,200 $725 $725 $725 $725 Group of answer choices $88.94 $94.93 $85.52 $93.22 $66.71 2 4Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. O WACC: CFS CFL O a. $199.41 O b. $0.00 O c. $109.03 O d. $7.51 Oe. $8.32 10.75% 0 -$1,100 -$2,200 1 $375 $725 2 $375 $725 3 $375 $725 st 4 $375 $725Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 10.75% 1 2 4 CFs -$1,100 $375 $375 $375 $375 CFL -$2,200 $725 $725 $725 $725 O a. $6.49 b. $9.40 c. $0.00 O d. $6.66 O e. $7.66
- Kosovski Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost. WACC: 10.75% 0 1 2 3 4 CFS -$775 $560 $535 CFL -$775 $315 $315 $315 $315 Please explain the process and provide calculations.Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost.the Kosovski Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. If decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost. WACC: CFS CFL a. $35.69 b. $29.26 c. $31.31 d. $26.33 e. $34.82 6.25% 0 -$1,050 -$1,050 1 $675 $360 2 $650 $360 3 $360 4 $360
- Project A requires an investment of 1 million today and pays out 5 million in expectation next years. Project B requires an investment of $10 million today and pays out $ 20 million in expectation next year. Project B has high idiosyncratic risk and no systematic risk, while Project A is risk free. The two projects are mutually exclusive. Assume the risk free rate is if >0%, Given these assumptions. Project A has a higher NPV than Project B.Trovato Corporation is considering a project that would require an investment of $62,000. No other cash outflows would be involved. The present value of the cash inflows would be $77,500. The profitability index of the project is closest to (Ignore income taxes.): Multiple Choice 0.75 O O 0.20 0.25 1.25Yonan Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone. How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost. WACC: 14.25% 0 1 2 3 4 CFS -$950 $500 $800 $0 $0 CFL -$2,100 $400 $800 $800 $1,000 G $93.62 $95.90 $127.87 $0.00 $116.46
- A firm must decide between investing in two alternative risky projects, each requiring the same initial investment. Project A has an equal probability of four possible payoffs: $80m, $100m, $120m or $140m. Project B has a 50:50 chance of a payoff of $90m or $126m. Assuming that the firm’s managers are risk averse, which project would they prefer, and why?17. Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause S0.00 value to be lost. WACC: 10.50% 1 2 3 CFs -S1,100 $375 $375 $375 $375 CFL -$2,200 $725 $725 $725 $725 a. $2.33 b. $1.91 c. $0.00 d. S2.77 e. $2.11 18. Margetis Inc. carries an average inventory of $750,000. Its annual sales are $10 million, its cost of goods sold are 75% of annual sales, and its receivables collection period is twice as long as its inventory conversion period. The firm buys on terms of net 30 days, and it pays on time. Its new CFO wants to decrease the cash conversion cycle by 18 days, based on a 365-day year. He believes he can reduce the average inventory to $613,739 with no effect on…As the CFO of Yo co., you are considering three projects with different levels of risks. You estimate that its below-average risk projects have a WACC of 7%, its average-risk projects have a WACC of 10%, and its above-average risk projects have a WACC of 13%. Which of the following projects should you accept? a. Project A, which is of below-average risk and has a return of 8%. B. Project B, which is of average risk and has a return of 9.5%. C.Project C, which is of above-average risk and has a return of 12%. D. None of the projects should be accepted. E. All of the projects should be accepted.