NPV NPV as function of discount rate $500 $400 NPV Profile $300 $200 Z $100 $0 0% 10% 20% 30% 40% 50% Project A -$100 -$200 Project B -$300 Discount rate Consider the NPV profile of projects A and B. Which of the following is true? X=crossover rate; Y= IRR of project B; Z=IRR of project A OX=crossover rate; Y= IRR of project A; Z=IRR of project B OX-IRR of project A; Y= IRR of project B; Z=crossover rate

NPV NPV as function of discount rate $500 $400 NPV Profile $300 $200 Z $100 $0 0% 10% 20% 30% 40% 50% Project A -$100 -$200 Project B -$300 Discount rate Consider the NPV profile of projects A and B. Which of the following is true? X=crossover rate; Y= IRR of project B; Z=IRR of project A OX=crossover rate; Y= IRR of project A; Z=IRR of project B OX-IRR of project A; Y= IRR of project B; Z=crossover rate

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 23SP: Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site....

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Use attachment to answer question q3- This question relates to the diagram, which shows the NPV profile for Projects X and Y. What is the Internal Rate of Return of Project X? Select one: a. 13% b. 9% c. 4% d. 10%
Given the following two mutually exclusive projects, always choose Project A (the project with a higher IRR). Project NPV IRR A $100 10.5% B $150 9.5% Group of answer choices True False
Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign. Discount Rate NPV Project A NPV Project B 0% $ $ 5 $ $ 10 $ $ 12 $ $ 15 $ $ 18.1 $ $ 23.01 $ $ The exel sheet is down below for the entirre question! Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations. % What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A: % Project Acceptance: WACC 13.00% Accept #N/A WACC 18.00% NPVA $2.66 NPVB $53.19 Accept #N/A NPV Profiles:…
Calculate the result of NPV for project A with discount rate = 10%, the best solution is: Year 0 123 + 4 Select one: a. 95.5 b. 127.3 O b. O C. c. -181.8 O d. d. -136.4 A -800 100 200 300 200 B -200 50 70 80 240
Details WACC 0 SGWN-O 1 2 3 4 5 6 7.80% Project A Project B -1225 395 402 423 432 489 512 -2146 592.5 603 634.5 648 733.5 768 1. Construct NPV profile table by using cashflows from Project A and B above. 2. Draw NPV profile 3. Compute crossover rate To receive EC your work has to be done in Excel.
Choices for last three requirements 3. What is the approximate IRR of Project A? a. 28% b. 18% c. 24% d. 21% 4. What is the approximate IRR of Project B? a. 17% b. 14% c. 20% d. 22% 5. if the crossover rate is exactly 9.31% which of the following discount rate would have a conflict in the decision making (between NPV and IRR) assuming the projects are mutually exclusive? a. 7% b. 11%
Whispering Winds Company is considering a long-term investment project called ZIP. ZIP will require an investment of $130,000. It will have a useful life of four years and no salvage value. Annual cash inflows would increase by $81,000, and annual cash outflows would increase by $40,500. In addition, the company's required rate of return is 10% Click here to view the factor table (a) Calculate the net present value on this project. (If the answer is negative, use either a negative sign preceding the number eg-5,275 or parentheses es. (5,275), For calculation purposes, use 5 decimal places as displayed in the factor table provided, eg. 1.25124 and final answer to O decimal places, eg. 5,275) Net present value $ Identify whether the project should be accepted or rejected. The project should be (b) Q Search 458 PM
id 1 :uonsenn siu i 29 o Consider the following two projects: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Discount Project C/F Alpha C/F C/F C/F C/F C/F C/F C/F Rate -79 20 25 30 35 40 N/A N/A 12% Beta - 80 25 25 25 25 25 25 25 13% The net present value (NPV) for project alpha is closest to: A. $31 B. $25 OC. $21 D. $38 Click to select your answer. MacE esc D00 O O O 0
Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site. Gardial Fisheries is considering two mutually exclusive investments. The projects expected net cash flows are as follows: a. If each projects cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? b. Construct NPV profiles for Projects A and B. c. What is each projects IRR? d. What is the crossover rate, and what is its significance? e. What is each projects MIRR at a cost of capital of 12%? At r = 18%? (Hint: Consider Period 7 as the end of Project Bs life.) f. What is the regular payback period for these two projects? g. At a cost of capital of 12%, what is the discounted payback period for these two projects? h. What is the profitability index for each project if the cost of capital is 12%?
Consider the following teo mutually exclusive projects X 20600, 9000 9400 8950 Y 20600 10400 7950 8850 calculate the irr for each project, what is the crossover rate, what is the npv of the projects x and y with a discount rate of 0, 15, and 25%
A2. (PaybackandNPV)Threeprojectshavethecashflowsgivenhere.Thecostofcapitalis10%. a. Calculate the paybacks for all three projects. Rank the projects from best to worst based on their paybacks. Calculate the NPVs for all three projects. Rank the projects from best to worst based on their NPVs c. Why are these two sets of rankings different? YEAR 0 1 2 3 4 5Project 1 −10 4 3 2 1 5 Project 2 −10 1 2 3 4 5 Project 3 −10 4 3 2 1 10
NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: EXPECTED NET CASH FLOWS Year Project A Project B -$340 -$630 -528 210 -219 210 3 -150 210 1,100 210 820 210 990 210 -325 210 a. Construct NPV profiles for Projects A and B. Select the correct graph. A B VPVS) 1400 VPV(S) VPV(S) 1400 1400- 1200 1200- 1200- 1000 1000 1000 800 Project B 800- Project A 800 Project A 600 600- 600 400 400- Project A Project B 400 200 200 Project B 200 Cost of capiar5 20 -5 30 -5 5 +++ 10 20 25 30 -5 15 Cost of cntal% -200 Cost of capital %) 20 25 30 -200 -200 -400 -4001 -400I D VPVS) T