Which project should you invest in according to the NPV and IRR?Project A NPV@ 10% WACC = $135 and IRR 22%Project B NPV @ 10% WACC = $17 and IRR 21%Project C NPV @ 10% WACC = $146 and IRR 23%O a Project AO b. Cannot determineOc. Project CO d. Project BO e. Project A or B

Net present value is the difference between the present value of cash inflows and present value of…

Which project should you invest in according to the NPV and IRR? Project A NPV@ 10% WACC = $135 and IRR 22% %3D Project B NPV @ 10% WACC = $17 and IRR 21% Project C NPV@ 10% WACC = $146 and IRR 23% %3D O a. Project A

Which project should you invest in according to the NPV and IRR? Project A NPV@ 10% WACC = $135 and IRR 22% %3D Project B NPV @ 10% WACC = $17 and IRR 21% Project C NPV@ 10% WACC = $146 and IRR 23% %3D O a. Project A

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....

See similar textbooks

Related questions

Q: Calculate the NPV of each project with a 4% discount rate. Which project(s) will be undertaken if…

A: Because you have asked a question with multiple parts, we will solve the first 3 parts as per…

Q: Using accounting rate of return to make capital investment decisions Carter Company is considering…

A: ARR: Accounting rate of return is use for measuring the profitability of an investment. ARR focus on…

Q: Refer to the table below to answer the following question. Project Initial Investment NPV P 200…

A: Profitability index is the ratio of present value of cash inflows and present value of cash…

Q: You are evaluating the following two mutually exclusive projects: Project Year…

A: IRR (Internal rate of return): It is considered as an annual growth rate which the investor is…

Q: a) Find the PP and NPV of the following projects. Assume that the projects' cost of capital (or…

A: NPV = - initial investment+ Cash flows 1/(1+r)^1 + cash flow 2 /(1+r)^2..... Cash flow n/(1+r)^n…

Q: Which project would be the best investment to use if project B has (1,250,000) 3 yr payback, cost of…

A: Net Present Value: It is a measure of absolute profitability used by project managers in the areas…

Q: For this question you need to attach a file in Excel with your calculations. What do we call the…

A: IRR is the internal rate of return. It is the rate at which Net present value of the project will be…

Q: A project has an investment cost of $200,000 and a profitability index of 1.6. What is the net…

A: Profitability index = PV of cash inflows/PV of cash outflows PV of cash inflows= 1.6 *$ 200000 = $…

Q: Find the modified BI C gatio for the following project. Use PW formulation- Also test the…

A: Modified B/C ratio stands for modified benefit cost ratio. It is calculated by subtracting the…

Q: b) Find the IRR of the following projects and make your decision. Assume that the projects' cost of…

A: CASH FLOW DETAILS: YEAR CASH FLOW X CASH FLOW Y 0 -800 -100 1 60 22 2 60 22 3…

Q: The Profitability Index of a project is 1.28 and its cost of investment is 250000. The NPV of the…

A: In capital budgeting decisions, there are various metrics used for decision-making. Profitability…

Q: Suppose that you could invest in the following projects but have only $24,480 to invest. Which…

A: The project with Higher net present value will be selected because this the amount net amount that…

Q: The cashflow of a project in Year 0, 1, 2, and 3 are -$200, $100, $100, $100. If opportunity cost of…

A: Profitability Index (PI) is a discounted capital budgeting technique that is used for…

Q: NPV Project A Project X $0 Cost of Capital 0% 22% 30% 12% What is the IRR of Project A? O A. 12% В.…

A: Internal rate of return Internal rate of return is the method of capital budgeting that measures the…

Q: Following is information on two alternative investments being considered by Tiger Co. The company…

A: Internal rate of return method: Internal rate of return method is one of the capital investment…

Q: Lewis Services is evaluating six investment opportunities (projects). The following table reflects…

Q: If a $300,000 investment has a project profitability index of 0.25, what is the netpresent value of…

A: Profitability Index of a project means ratio of present value of future cash flows of the project…

Q: Determine feasibility of the project using IRR and ERR of the project. Is it acceptable? Use epsilon…

A: Capital budgeting decisions are the decisions that are to be made by a corporation for accepting or…

Q: Please help! Thank you so much in advance. I need to show all work.

A: According to data given we will do the projects where IRR exceeds WACC so in the first question if…

Q: following estimated benefit and cost. By using NPV method, select the project and consider WACC 8%…

A: Net Present Value: Net present value is the measure of profitability in dollar amounts of a project…

Q: Consider the following information about 5 projects. Which project or projects are acceptable based…

A: While accepting a project an investor sees the project NPV, IRR, PI

Q: b) Find the IRR of the following projects and make your decision. Assume that the projects' cost of…

A: The IRR can be calculated using the NPV formula. By solving using goal seek or trial and error…

Q: Project A Project B Net present value (a) $ 2,000 $ 3,500…

A: Solution: Particulars Project A Project B Investment required $5,000 $10,000 Net Present…

Q: QUESTION 3 Consider the following information about 5 projects. Which project or projects are…

A: Projects that have positive net present value and IRR more than cost of capital are accepted.

Q: Consider the following two mutually exclusive projects: Year Cash Flow(A) -$ 63,000 39,000 33,000…

A: Since you have posted a question with multiple sub-parts, we will solve first four subparts for…

Q: You are a financial analyst for the Brittle Company. The director of capital budgeting has asked you…

A: 1)In case of these two projects are independent, the both projects can be accepted because both the…

Q: 6 Lewis Services is evaluating six investment opportunities (projects). The following table…

A: Cash is one of the important current asset of the business. Incoming of cash is known as cash…

Q: XY Company is considering 5 investment projects as follows: Project Investment…

A: NPV of a project is the sum of all the cash in flow and outflows. Profitability index (PI) is…

Q: Calculate the profitability index for project X. B. Calculate the profitability for project Y C.…

A: Profitability index = 1 + Net Present Value/Initial Investment

Q: Do the following problems. You must show your work.c) Find the IRR and MIRR of the following project…

A: Excel Spreadsheet:

Q: Project A: IRR = 4%, Initial cost =100, NPV = 200 Project B: IRR = 14%, Initial cost =200, NPV = 230…

A: Net Present Value (NPV) refer as the difference between current value of cash inflow and cash…

Q: Do the following problems. You must show your work. b) Find the IRR of the following projects and…

A: INFORMATION: YEAR CASH FLOW A CASH FLOW B 0 -800 -100 1 60 22 2 60 22 3 60 22…

Q: Q16) Salalah company management is considering three competing investment Projects A, B and C.…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Compute the Profitability Index (PI) for each project? Project A Project B Profitability…

A: Profitability index is an important capital budgeting tool. We use the tool of profitability index…

Q: calculations and round your answers to 2 decimal places, e.g., 32.16.) p. What is the NPV for each…

A: Project A Year Cash Flow Cumulative Cash Flow 1 44000 44000 2 62000 106000 3 79000…

Q: Consider the investment project with net cash flows shown. There are 2 rates of return for the…

A: Capital budgeting is the process by which a corporation examines potential large projects or…

Q: c) Find the IRR and MIRR of the following project and make your decision. Assume that the project's…

A: Computation of IRR and MIRR:

Q: Consider the following investment projects for SDL Engineering. All of the projects have a…

A: Present worth is the worth of an investment in today’s time. Present worth can be calculated by…

Q: Q3) Based on the information below which projects will we choose based on weighted average…

A: The calculation is:

Q: Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0…

A: Net Present Value(NPV) is excess of present value(PV) of cash inflows over initial outlay of…

Q: Can you show me how this is done? Kepner Inc, is considering a capital investment project. that…

A: Profitability Index = Present value of cashflow / initial investment

Q: Project C0 C1 C2 A -500 300 450 B -200 150 200 Consider the following two mutually exclusive…

A: A discount rate at which the net present worth of an investment is equal to zero is term as an…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Which project should you invest in according to the NPV and IRR?
Project A NPV@ 10% WACC = $135 and IRR 22%
Project B NPV @ 10% WACC = $17 and IRR 21%
Project C NPV @ 10% WACC = $146 and IRR 23%
O a Project A
O b. Cannot determine
Oc. Project C
O d. Project B
O e. Project A or B

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Rate A - 100 40 50 60 N/A 0.18 B - 73 30 30 30 30 0.18 Assume that projects A and B are mutually exclusive. The correct investment decision and the best rationale for that decision is to A. invest in project B, since NPV, > NPV, A B. invest in project A, since NPV, > 0. OC. invest in project A, since NPV, IRR, A'
A firm is considering the following independent projects. Project Investment Present value offuture cash flows NPV A $130 $176 $46 B $103 $115 $12 C $183 $287 $104 D $161 $199 $38 E $184 $273 $89 What is the Profitability Index of Project B? Question 5Answer a. 0.85 b. 1.12 c. 0.89 d. 1.18
Use the information for the question(s) below. Project A - 10,000 Project B Time 0 - 10,000 Time 1 5,000 4,000 Time 2 4,000 3,000 Time 3 3,000 10,000 If WiseGuy Inc. uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest? OA. Project A OB. Project B OC. Project A and Project B have the same ranking OD. Cannot calculate a payback period without a discount rate.
of stion Given the following information about projects A and B: Project A Project B -10,000 -10,000 4,000 3,000 10,000 Time 0 Time 1 Time 2 Time 3 If alpha company uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest? Select one: O O O 5,000 4,000 3,000 a. Project A b. Project B c. Project A and Project B have the same ranking. d. Cannot calculate a payback period without a discount rate.
Which of the following statement is true? * IRR and discount rate all have the same meaning.... If BCR is less than zero, an investment to a conservation project is worthwhile.... Both of them are true
Use attachment to answer question q1- This question relates to the diagram, which shows the NPV profile for Projects X and Y. Assume Projects X and Y and mutually exclusive, discretionary projects. For what range of costs of capital should Project X be accepted? Select one: a. Greater than 9% b. Between 4% and 13% c. Greater than 13% d. Greater than 4%
Consider the following two mutually exclusive projects: When (at what levels of the cost of capital) would choose project A? Cash Flows ($) Project C0 C1 C2 C3 A -90 +60 +50 0 B -100 0 0 +140 Multiple Choice When the cost of capital is less than 9.58% and mroe than 11.87% When the cost of capital is more than 9.58% and less than 14.98% When the cost of capital is less than 9.58% and more than 14.98% When the cost of capital is more than 0% and less than 9.58%
Bausch Company is presented with the following two mutually exclusive projects. The required return for both projects is 13 percent. Year 01234+ Project M -$144,000 63,100 81,100 72,100 58,100 Project N -$351,000 154,500 176,000 139,500 106,000
Evaluation of Projects or ME Alternatives based on different Economic Worth Analysis: AW analysis of one project Choose... ROR analysis of two alternatives Choose... PW analysis of one project Choose... • ROR analysis of one project Choose... 0 PW analysis of ME Alternatives Choose... The remaining undepreciated capital investment in year t is called: Select one: O a BVt O b. P OC B O d. MV Although land is considered as real property, it is not depreciable. Select one: O True O False
Refer to the table below to answer the following question. Project Initial Investment NPV P 200 22 Q 180 26 R 185 38 S 380 10 The project with highest Profitability Index is Project P Project Q Project R Project S
PRINTED NAME _____________________________________________ Project X Project Y PB (payback) DPB (Discounted Payback) NPV $ PI IRR% MIRR% EAA (NUS) $ CROSSOVER RATE % NPV $ (using crossover rate) If the projects are INDEPENDENT, which would you choose? WHY? _____________________________________________________________ If the projects are MUTUALLY EXCLUSIVE, which would you choose? WHY? _____________________________________________________________ When you would be INDIFFERENT between the projects? WHY? _____________________________________________________________ SIGNATURE _____________________________________________________
Use attachment to answer question q2- This question relates to the diagram, which shows the NPV profile for Projects X and Y. At what cost of capital are we indifferent between Projects X and Y? Select one: a. 13% b. 4% c. 10% d. 9%