When two mutually exclusive projects are being compared, explain whythe short-term project might be ranked higher under the NPV criterion ifthe cost of capital is high, whereas the long-term project might be deemedbetter if the cost of capital is low. Would changes in the cost of capital evercause a change in the IRR ranking of two such projects? Why or why not?

Q: ND Inc. is considering Projects S and L, whose cash flows are shown below. These projects are…

A: There are various techniques that are used by the management in order to select the most beneficial…

Q: nternal rate of return   For the project shown in the following​ table, calculate the internal rate…

A: IRR is rate at which net present value of the cash flows will be equal to 0 it is calculated using…

Q: Why would the average rate of return differ from the internal rate of return on the same project

A:

Q: Which of the following is CORRECT? Select one: a. If the NPV of a project is negative, the IRR for…

A: NPV is a technique that helps the company to analyze the viability of the project i.e. the company…

Q: We should accept a project if the Net Present Value is positive and the Internal Rate of Return is…

A: Net present value is referred as the difference between the cash inflow's present value and also…

Q: two mutually exclusive projects were being compared, would a high cost of capital favor the…

A: Step -2 in the answer

Q: Using the profitability index, which of the following mutually exclusive projects should be…

A: The formula to compute profitability index as follows:

Q: O The NPV and IRR methods, when used to evaluate two independent and equally risky projects, will…

A: Net present value is defined as the difference between the PV of cash flows that are inflows and…

Q: What is the NPV decision rule for discretionary mutually exclusive projects? A. Accept the project…

A: There are two types of projects: Independent projects. Mutually exclusive projects. Independent…

Q: If two mutually exclusive projects were being compared, would a high cost of capital favorthe…

A: If two mutually exclusive projects were being compared, a higher cost of capital would favour the…

Q: ND Inc. is considering Projects S and L, whose cash flows are shown below. These projects are…

A: Formula:

Q: nancial analyst is evaluating the following projects, which are mutually exclusive, meaning that…

A: NPV is the net present value is difference between the present value of cash flow and the initial…

Q: Assume that the firm has established a single interest rate for project evaLuation. considering all…

A: Firms always analyze the projects to check their viability because they are going to spend a huge…

Q: The following information on two mutually exclusive projects is given below: Which of the following…

A: Correct option is (c)- Project B would be a better choice as long as the investor's MARR is lessthan…

Q: The following information on two mutually exclusive projects is given below:n Project A Project B0…

A: The correct statement is (a) Since the two projects have the same rate of return, they are…

Q: a. What is the profitability index for each project? Note: Do not round intermediate calculations…

A: Initial Investment of Project Y = 28,400 Initial Investment of Project Z = 64,000 Year Project Y…

Q: The table below shows the internal rate of return (IRR%) for three investment projects A, B and C…

A: IRR  is the rate of discount at which the sum of discounted cash inflows equals the discounted cash…

Q: Which of the following is not a variable when setting the project bid price. Multiple Choice   Risk…

A: Net present value  It  is the difference between the present value of cash inflows(Discounted value)…

Q: If the net present value of a project is positive, the project earns a return that is Group of…

A: Introduction: According to the net present value rule, executives and shareholders must only invest…

Q: A company is considering two alternative investment projects both of which have a positive net…

A: Answer: The potential reasons for conflict between NPV and IRR ranking are as follows, Net present…

Q: Which of the following statements regarding the net present value rule and the rate of return rule…

A: The question is based on the concept of Financial analysis.

Q: Two investors are considering the same project. The net present worth of the project will be higher…

A: The question is True or False.

Q: Finance Question

A: Given:

Q: Which of the following is the correct calculation of project Sigma's IRR? 46.74% O 40.64% O 36.58%…

A: 1. cash out flow at t0 = $ 800000 and calculate IRR. year cash flow PVF@40.64% Present Value ($) 1 $…

Q: Explain whether two competing, alternate capital projects are equally desireable if they both…

A: Net Present Value (NPV) which is determined with difference in the cash outflows PV (Present Value)…

Q: According to the profitability index criterion, a project is acceptable if its profitability index…

A: PI = Present value of future expected cash flows / Initial investment amount in the project.

Q: Which type project is one whose acceptance or rejection does not directly eliminate other projects…

A: Under capital budgeting project one or more projects are evaluated based on their NPV, IRR and other…

Q: You should accept a project when the ?: net present value is negative. profitability index is…

A: Honor code- Since you have asked multiple questions, we will solve only the first question for you.…

Q: Which of the following projects would you feel safest in accepting? Assume the opportunity cost of…

A: NPV: NPV is also called net present value. NPV is the difference between the present value of cash…

Q: Which statemen is true?   A.   IRR and NPV always lead to the same decision about projects.…

A: A. IRR and NPV always lead to the same decision about projects.- False (Reason- When comparing two…

Q: Which of the following statements is inaccurate under perfect capital markets? A. The NPV of a…

A: Under a Perfect Capital Market any of the investors have enough power to change the price of a…

Q: ) IRR may produce multiple rates of return when cash flows are non-conventional. B) IRR is best used…

A: Internal Rate of Return(IRR) is a financial metric for cash flow analysis that compares investments…

Q: Consider the following two mutually exclusive projects: When (at what levels of the cost of…

A: We need to calculate IRR and incremental IRR using excel. IRR is rate at which NPV is zero whereas…

Q: What is Project A's NPV? Do not round intermediate calculations. Round your answer to the nearest…

A: Net Present Value: It is the present worth of the project's cash flow. It is calculated by reducing…

Q: O The NPV and IRR methods, when used to evaluate two independent and equally risky projects, will…

A: The discounted technique of net present value (NPV) is used to assess the effectiveness of a…

Q: The relationship between NPV and IRR is such that a. both approaches always provide the same ranking…

A: IRR is the required rate of return for the project to have zero Net Present value.   Net present…

Q: Why might the cost of capital for a foreign project differ from that of an equivalentdomestic…

A: There are two approaches to evaluate a foreign project: the home currency approach and the foreign…

Q: Sexton Inc. is considering Projects S and L, whose cash flows are shown below. These projects are…

A: NPV It is the best alternative method used as an indicator of the dynamic calculations of an…

Q: The following information is available on two mutually exclusive projects. All numbers are in ‘000s.…

A: NPV Method: Working in '000s and calculation are done in excel so there is no intermediate rounding:…

Q: How do you overcome the challenges posed by unequal lives of the projects being comparedand when…

A: Capital Budgeting is the evaluating techniques which evaluates the profitability of the long term…

Q: Given mutually exclusive projects, which project should be selected given the MARR- 9%? Note that…

A: Before investing in new projects or investments, profitability is evaluated by using various methods…

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.