Considering two independent projects

Assignment Help Financial Management
Reference no: EM131339951

Juan is considering two independent projects. Project A costs $74,600 and cash flows of $18,700, $46,300, and $12,200 for Years 1 to 3, respectively. Project B costs $70,000 and has cash flows of $10,600, $15,800, and $67,900 for Years 1 to 3, respectively. Juan assigns a discount rate of 10 percent to Project A and 12 percent to Project B. Which project or projects, if either, should he accept based on the profitability index rule? a. accept either A or B, but not both b. accept Project B and reject Project A c. accept Project A and reject Project B. d. reject both projects e. accept both projects

Reference no: EM131339951

Questions Cloud

Explain the significance of the public health issue : Choose a public health issue to research and study - Reflects critically on public health issue and explains reasons behind choosing it to study and research
Son future education : A mother wants to invest $9,000 for her son's future education. She invests a portion of the money in a bank certificate of deposit (CD account) which earns 4& and the remainder in a savings bond that earns 7%. If the total interest earned after o..
Project has a net present value equal to zero : If a project has a net present value equal to zero, then:
Find the volume of ideal gas as a function of temperature : Starting with the fundamental equation in the Helmholtz free energy representation (F = F(T,V,N)) that you derived for the previous assignment, derive the fundamental relation in the Gibbs free energy representation (G = G(T, P, N)).
Considering two independent projects : Juan is considering two independent projects. Project A costs $74,600 and cash flows of $18,700, $46,300, and $12,200 for Years 1 to 3, respectively. Project B costs $70,000 and has cash flows of $10,600, $15,800, and $67,900 for Years 1 to 3, respec..
A cash outlay that was incurred in the past : A cash outlay that was incurred in the past and cannot be recovered in the future regardless of whether the proposed project is accepted or not is known as a(n): a. sunk cost b. opportunity cost c. externality d. cannibal cost e. mutually exclusive e..
Determine the earnings per share and market to book ratio : Determine the Earnings per share, Price-to-earnings ratio, Book value per share, and Market-to-book ratio.- How much of the retained earnings total was added during 2006?
When computing the weighted average cost of capital : When computing the weighted average cost of capital, which of these are adjusted for taxes? a. cost of debt b. both the cost of equity and the cost of preferred stock c. cost of preferred stock d. cost of equity e. the costs of all forms of financing
What advantages exist for multiple-treatment reversal design : What advantages or disadvantages exist for multiple-treatment reversal designs and Alternating Treatment Designs (ATD)

Reviews

Write a Review

Financial Management Questions & Answers

  Rate really makes any difference in the net present value

Dennis wants to determine if the discount rate really makes any difference in the net present value of a project. He feels that if a project is acceptable on one rate of return, it will be acceptable at all rates of return. To explain why his thinkin..

  A regular retirement plan requires that taxes

A regular retirement plan requires that taxes be paid at the time the money is removed from the plan. What is the after-tax value of a $5,000 deposit into a retirement plan today that generates an 8% return for 20 years if the investor is taxed at th..

  What is expected return of portfolio

You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent in Bella Co., and 30 percent in Edward Resources. What is the expected return of your portfolio if Jacob, Bella, and Edward have expected returns of 0.05, 0.13, and 0.03, respe..

  Long-term debt ratio-the amount of the firm net fixed assets

The Caughlin Company has a long-term debt ratio of .43 and a current ratio of 1.50. Current liabilities are $990, sales are $6,410, profit margin is 9.3 percent, and ROE is 20.4 percent. What is the amount of the firm’s net fixed assets?

  Compare the cost and provisions of these policies

Obtain premium rates for $50,000 whole life, universal life, and term life policies from local insurance agents. Compare the cost and provisions of these policies.

  Issue of preferred stock outstanding

Lane, Inc., has an issue of preferred stock outstanding that pays a $6.55 dividend every year in perpetuity. If this issue currently sells for $91 per share, what is the required return?

  What is routers optimal capital structure

What is Router’s optimal capital structure? Is the same debt ratio optimal regardless of whether the firm chooses operating Plan L or H? Does this optimal D/V ratio minimize risk as measured by either the coefficient of variation of ROE or the times ..

  The bonds make semiannual payments

Consider the following information for Evenflow Power Co., Debt: 3,500 6 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. Common stock: 87,500 shares outstan..

  After any necessary reinvestment in the business

Sam wants to start a small commercial bakery to supply gourmet deserts to local restaurants. He believes that with his product line and his connections in the restaurant business, he can grow the business over the next five years into a profitable ni..

  Calculate the size of the fund at the end of the four years

our company has decided to set up a welfare fund with an initial payment of Ghc 275m which is compounded six-monthly over a four-year period at 20% per annum. Calculate the Size of the fund at the end of the four years. An entrepreneur purchased a pi..

  Suppose the average return on an asset

Suppose the average return on an asset is 12.2 percent and the standard deviation is 21.8 percent. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to determine the probability that in any given year you wi..

  Is lowering the total net income of the firm

Lamplighter Fixtures started a new project last year. As it turns out, the project has been operating at its accounting break-even level of output and is now expected to continue at that level over its lifetime.  is operating at a lower level than if..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd