CAPITAL BUDGETING CRITERIA You must analyze two projects, X and Y. Each project costs $10,000, and the firm's WACC is 12%. The expected net cash flows are as follows: 1 4 + Project X - $10,000 Project Y -$10,000 $6,500 $3,500 $3,000 $3,500 $3,000 $3,500 $1,000 $3,500 a. Calculate each project's NPV, IRR, MIRR, payback, and discounted payback. b. Which project(s) should be accepted if they are independent? c. Which project(s) should be accepted if they are mutually exclusive? d. How might a change in the WACC produce a conflict between the NPV and IRR rankings of the two projects? Would there be a conflict if WACC were 5%? (Hint: Plot the NPV profiles. The crossover rate is 6.21875%.) e. Why does the conflict exist?
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- CAPITAL BUDGETING CRITERIA You must analyze two projects, X and Y. Each project costs $10,000, and the firm's WACC is 12%. The expected net cash flows are as follows: 1 2 4 Project X Project Y -$10,000 -$10,000 $6,500 $3,500 $3,000 $3,500 $3,000 $3,500 $1,000 $3,500 Calculate each projecť's NPV, IRR, MIRR, payback, and discounted payback. b. Which project(s) should be accepted if they are independent? c. Which project(s) should be accepted if they are mutually exclusive? a. с. How might a change in the WACC produce a conflict between the NPV and IRR rankings of the two projects? Would there be a conflict if WACC were 5%? (Hint: Plot the NPV profiles. The crossover rate is 6.21875%.) e. Why does the conflict exist?Capital Budgeting Techniques Analyze the two independent projects, X and Y. Each project costs $10,000, and the firm’s required rate of return is 12%. The expected net cash flows are as follows: Outflows Inflows Projects Year 1 2 3 4 X -10,000 6,500 3,000 3,000 1,000 Y -10,000 3,500 3,500 3,500 5,500 Required: Calculate for each project: Payback Period IRR NPV PI Give your decision regarding acceptation and rejection of the project. Explain which criteria you based your decision upon and why?Capital Budgeting Methods Project S has a cost of $11,000 and is expected to produce benefits (cash flows) of $3,400 per year for 5 years. Project L costs $23,000 and is expected to produce cash flows of $6,900 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to the nearest cent. Project S: $ Project L: $ Which project would be selected, assuming they are mutually exclusive? Based on the NPV values, Project S/Project L would be selected. Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places. Project S: % Project L: % Which project would be selected, assuming they are mutually exclusive? Based on the IRR values, Project S/Project L would be selected. Calculate the two projects' MIRRs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to two decimal places. Project S: %…
- Modified internal h. Payback period; discounted payback CAPITAL BUDGETING CRITERIA You must analyze two projects, X and Y. Each project costs $10,000, and the firm's WACC is 12%. The expected cash flows are as follows. ST-2 0. 1 2. 4 -$10,000 -$10,000 $3,000 $3,500 $1,000 $3,500 $3,000 Project X Project Y $6,500 $3,500 $3,500 Calculate each project's NPV, IRR, MIRR, payback, and discounted payback. b. Which project(s) should be accepted if they are independent? Which project(s) should be accepted if they are mutually exclusive? d. How might a change in the WACC produce a conflict between the NPV amd IRR rankings of the two projects? Would there be a conflict if WACC were 5%? (Hint: Plot the NPV profiles. The crossover rate is 6.21875%.) a. C. e. Why does the conflict exist?You have been given the task of anal yzing two proposed capital budgeting projects, Project A and Project B. Each project has a cost of $40,000, and the cost of capital for each project is 12%. Their expected net cash flows are: Expected Net Cash Flows Project A ($). (40,000) 7,500 13,000 15,000 20,000 Year Project B (S) (40,000) 14,000 14,000 14,000 14,000 1 3 4 (a) Calculate each project's payback period, (b) Calculate each project's net present value (NPV) (c) Calculate each project's internal rate of return (IRR). (d) Which project(s) should be accepted if they are independent? 3 O Type here to search 7Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects' NPVS, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to the nearest cent. Project S: $ Project L: $ Which project would be selected, assuming they are mutually exclusive? Based on the NPV values, Select- v would be selected. Calculate the two projects' IRRS. Do not round intermediate calculations. Round your answers to two decimal places. Project S: % Project L: % Which project would be selected, assuming they are mutually exclusive? Based on the IRR values, -Select- would be selected. Calculate the two projects' MIRRS, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to two decimal places. Project S: % Project L: % Which project would be…
- Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to the nearest cent. Project S: $ Project L: $ Which project would be selected, assuming they are mutually exclusive? Based on the NPV values, would be selected. Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places. Project S: % Project L: % Which project would be selected, assuming they are mutually exclusive? Based on the IRR values, would be selected. Calculate the two projects' MIRRs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to two decimal places. Project S: % Project L: % Which project would be…Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to the nearest cent. Project S: $ Project L: $ Which project would be selected, assuming they are mutually exclusive? Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places. Project S: % Project L: % Which project would be selected, assuming they are mutually exclusive? Calculate the two projects' MIRRs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to two decimal places. Project S: % Project L: % Calculate the two projects' PIs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your…Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to the nearest cent. Project S: $ Project L: $ Which project would be selected, assuming they are mutually exclusive? Based on the NPV values, would be selected. Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places. Project S: % Project L: % Which project would be selected, assuming they are mutually exclusive? Based on the IRR values, would be selected. Calculate the two projects' MIRRs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to two decimal places. Project S: % Project L: % Which project would be…
- The Basics of Capital Budgeting Your division is considering two projects with the following cash flows (in millions): 0 1 2 3 Project A -$31 $7 $12 $22 Project B -$19 $13 $6 $5 What are the projects' NPVs assuming the WACC is 5%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places. Project A: $___ million Project B: $___ million What are the projects' NPVs assuming the WACC is 10%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places. Project A: $___ million Project B: $___ million What are the projects' NPVs assuming the…Appelbaum Inc. is comparing several alternative capital budgeting projects as shown below: Projects A B C Initial investment $80,000 $120,000 $160,000 Present value of net cash flows 90,000 110,000 200,000 Using the net present value, how many of the projects are available?? Group of answer choicesQuestion: You are a financial analyst for the Hitler Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each project is 12 percent. The projects’ expected net cash flows are as follows: Expected Net Cash Flows Year Project X Project Y 0 ($10,000) ($10,000) 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500 Required: Calculate each project’s payback period, discounted payback period, net present value (NPV), profitability index and internal rate of return (IRR). Which project or projects should be accepted if they are independent? Which project should be accepted if they are mutually exclusive?