Solar Tech Inc. must choose between two mutually exclusive projects: A and B. Both have a 10% required rate of return. Consider the following on projected cash flows: a. If you apply the payback criterion, which investment will you choose? Why? (5 marks) b. If you apply the NPV criterion, which investment will you choose? Why? (5 marks) c. If you apply the profitability index criterion, which investment will you choose? Why? (5 marks) d. What is the internal rate of return for each project? (5 marks) e. At what required rate of return would management be indifferent as to which project to choose? (5 marks) f. Based on your answers to the questions above, which project will you finally choose? Why? (5 marks)

Consider an economy with three states which occur with probability (0.2, 0.2, 0.6). Suppose a firm has a project which generates the state dependent cash flows (100, 240, 220) at t=1. The investment costs are 170 at t=0. The firm has 170 at t=0. The market portfolio generates the payoff (200, 230, 260) and has an expected return of 10%. The risk free rate is 2%. Suppose the CAPM holds.    (a) What is the beta of this project?    (b) What is the net present value of the project? Explain whether the firm should conduct the project.

Your firm has identified three potential investment projects. The projects and their cash flows are shown here: Project Cash Flow Today ($) Cash Flow in One Year ($) A -10 20 В 20 -10 Suppose all cash flows are certain and the risk-free interest rate is 10%. a. What is the NPV of each project? b. If the firm can choose only one of these projects, which should it choose? c. If the firm can choose any two of these projects, which should it choose?

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Profitability index. Given the discount rate and the future cash flow of each project listed in the following table, , use the PI to determine which projects the company should accept. ..... What is the Pl of project A? (Round to two decimal places.)

A firm has the following investment alternatives (refer to image): Each investment costs $3,000; investments B and C are mutually exclusive,and the firm’s cost of capital is 8 percent. a.) According to the internal rates of return, which investment(s) should the firm make? Why? b.) According to both the net present values and internal rates of return, which investments should the firm make? c.) If the firm could reinvest the $3,600 earned in year 1 from investment B at 10 percent, what effect would that information have on your answer to part b? Would the answer be different if the rate were 14 percent?

Two investments, A and B, cost the same but have different cash flows. The IRR for Investment A is 24% while the IRR for Investment B is 19%. If a required return of 16% is used, however, the NPVs of the two investment are the same. What is the range of required returns in which: a. You would choose A over B? c. You would choose B over A?

Your firm has identified three potential investment projects. The projects and their cash flows are shown here: Project Cash Flow Today Cash Flow in One Year A -10 20 B 5 5 C 20 -10 Suppose all cash flows are certain and the risk-free interest rate is 10%. (1) What is the NPV of each project? (2) If the firm can choose only one of these projects, which should it choose? (3) If the firm can choose any two of these projects, which should it choose?

please colud you explain me what how you using calculator or computation to determine NPV or IRR. A firm has the following investment alternatives:   Year                       A                                           B                                    C 1                             $400                                   $---                                  $-- 2                              400                                    400                                   --- 3                              400                                     800                                  --- 4                            400                                     800                               1,800     Each investment costs $1,400, and the firm's cost of capital is 10 percent.   a. What is each investment's internal rate of return? b. Should the firm make any of these investment? c. What is each investment's net present value? d. Should the firm firm make any of these investments?

Wolff Enterprises must consider one investment project using the capital asset pricing model​ (CAPM). Relevant information is presented in the following table. Item Rate of return ​Beta, b ​Risk-free asset 9​%   0.00 Market portfolio 14​%   1.00 Project     1.74 a.  Calculate the required rate of return for the​ project, given its level of nondiversifiable risk. b.  Calculate the risk premium for the​ project, given its level of nondiverisifiable risk.