A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:   0 1 2 3 4                         Project X -$1,000 $90 $320 $370 $750 Project Y -$1,000 $1,100 $90 $55 $45 The projects are equally risky, and their WACC is 12%. What is the MIRR of the project that maximizes shareholder value? Do not round intermediate calculations. Round your answer to two decimal places.   %

A company has an 11% WACC and is considering twomutually exclusive investments (that cannot be repeated) with the following cash flows: a. What is each project’s NPV?b. What is each project’s IRR?c. What is each project’s MIRR? (Hint: Consider Period 7 as the end of Project B’s life.)d. From your answers to parts a, b, and c, which project would be selected? If the WACCwas 18%, which project would be selected?

A risky $420,000 investment is expected to generate the following cash flows: Year    1    2    3    4$    102,700        $    163,030        $    160,824        $    135,200    If the firm’s cost of capital is 12 percent, should the investment be made?. Use a minus sign to enter a negative value, if any. Round your answer to the nearest dollar.NPV: $   Should The investment   be made? An alternative use for the $420,000 is a four-year U.S. Treasury bond that pays $25,200 annually and repays the $420,000 at maturity. Management believes that the cash inflows from the risky investment are equivalent to only 70 percent of the certain investment, which pays 6 percent. Should the investment be made? Use Appendix B to answer the question. Do not round other intermediate calculations. NPV: $   Should The investment  be made?

39. Deyland Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC = 9%. Year 0 a. $24.71 b. $27.46 c. $30.51 d. $33.90 e. $37.29 1 2 3 4 CF, -$1,100 $375 $375 $375 $375 CF₂ $2,200 $725 $725 $725 $725

For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash Flow 0 –$ 148,000 1 64,000 2 75,000 3 59,000 a. At a required return of 12 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At a required return of 21 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

A firm is faced with four investment proposals, A, B, C, and D, having the cash flow profiles shown below. Proposals A and C are mutually exclusive, and Proposal D is contingent on Proposal B being chosen. Currently, $750,000 is available for investment and the firm has stipulated a MARR of 10%. Determine which alternative the decision maker should select. Use the internal rate of return method.

You are going to allocate capital into safe and risky assets. The risky asset will earn 200% return if the economy is good (with a 55% chance). If, otherwise, it will lose 60% of the investment principal. States of Rate of Prob. nature Return According to the Kelly's criterion, how much do you have to allocate for the risky asset to maximize final wealth? (The safe asset earns zero return.) → (1) 35%; (2) 47%; (3) 59%; (4) 65%; 1 Good 55% 200% your |(5) 69%; (6) 75%; (7) 85%; (8) 97%; (9) 102%; (10) 114%; (11) 115%; Bad 45% -60%

You are offered the chance to participate in a project that produces the following cash flows: C0 C1 C2 +$ 5,000 +$ 4,000 −$ 11,000 The internal rate of return is 13.6%. If the opportunity cost of capital is 12%, what is the net present value of the project? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.

Project X has the following cash flows: C0 = -1,250, C1 = 750, and C2 = 900. If the IRR of the project is 20 percent and if the cost of capital is 25 percent, you would need more information accept the project reject the project be indifferent

12. The ABC Company is considering undertaking an investment that promises to have the following cash flows: period 0, −$50; period 1, $90. If the firm waits a year, it can invest in an alternative (that is, mutually exclusive) investment that promises to pay −$60 in period 1 and $100 in period 2. Assume a time value of money of 0.05. Which investment should the firm undertake? Use the net present value and the internal rate of return methods.