Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net
operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 11%.
2
.!!!!!
590
360
230
300
Project A -1,100
Project B -1,100
3
220
360
280
700
What is Project Delta's IRR? Do not round intermediate calculations. Round your answer to two decimal places.
Transcribed Image Text:Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net
operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 10%.
%
-Select-
0
1
Project A -1,300
Project B -1,300
650
250
What is Project A's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.
%
-Select-
2
3
360
295
280
430
4
What is Project B's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.
330
780
If the projects were independent, which project(s) would be accepted according to the MIRR method?
If the projects were mutually exclusive, which project(s) would be accepted according to the MIRR method?
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