Firm is considering two mutually exclusive

Assignment Help Financial Management
Reference no: EM131489277

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 9 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. Time: 0 1 2 3 Project A Cash Flow -31,000 21,000 41,000 12,000 Project B Cash Flow -41,000 21,000 9,000 61,000 Use the payback decision rule to evaluate these projects; which one(s) should be accepted or rejected? accept neither A nor B accept A, reject B reject A, accept B accept both A and B

Reference no: EM131489277

Questions Cloud

What percentage change would occur in price of bond : what percentage change would occur in the price of the bond if a 1% change occurred in the YTM?
What is dollar amount of dividends : What is the dollar amount of dividends that he received for owning the stock during the year?
At what point will you stop hiring workers : Sequencing Information You need to hire workers for a project and add one worker at a time to measure the added contribution of each worker.
Provide a rationale for the us publicly traded company : Provide a rationale for the U.S. publicly traded company that you selected, indicating the significant factors driving your decision as a financial manager.
Firm is considering two mutually exclusive : Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below.
Analyse the assumptions behind public interest : Analyse the assumptions behind public interest, private interest and capture theories and evaluate which one best explains each of the comment letters
Explain diminishing returns : Diminishing Returns Provide an example of a time when you entered a period of diminishing returns or even negative returns.
Compute the price of a bond : The Florida Investment Fund buys 58 bonds of the Gator Corporation through a broker. Compute the price of a bond.
What percentage change would occur in the price of the bond : what percentage change would occur in the price of the bond if a 1% change occurred in the YTM?

Reviews

Write a Review

Financial Management Questions & Answers

  Offered to buy a financial security that guarantees to pay

Elizabeth is offered to buy a financial security that guarantees to pay her $10 every 2 years forever. The annual interest rate is 8%. How much would she pay for it today if the first payment will be received today? How much would she pay for it toda..

  Decentralized and distributed IT architectures

What are functional silos and how do they evolve in organizations? Compare and contrast centralized, decentralized and distributed IT architectures. Which do you think is most appropriate for ERP and why? List the horizontal and vertical levels of sy..

  Which of statements is more useful to the financial manager

Accrual income vs. cash flow for a period Thomas Book Sales, Inc., supplies textbooks to college and university bookstores. The books are shipped with a proviso tht they must be paid for within 30 days but can be returned for a full refund credit wit..

  Find the price and P-E ratio of the firm

Castles in the Sand generates a return on equity of 5.80% (i.e.. ROE) and maintains a plowback ratio of 42.50%. Its earnings at the end of this year will be $5.00 per share. Investors expect a 8.70% rate of return on the stock. Find the price and P/E..

  Uncollected each year as result of this change in policy

Muncie Manufacturing is increasing its collection period by 25 days in hopes of attracting additional sales. Muncie currently has annual sales of $500,000. It expects revenues to increase $25,000 per year and expenses to increase by $10,000 per year...

  Calculate the break-even volume

A regional soft drink manufacturer is considering opening a new manufacturing plant in the Midwest. Its total fixed costs are $100 million, with the cost of the new plant included in that figure at a depreciated value based on the expected life of th..

  Banks want IFC involved with the deal of mozal project

Why do the sponsors and the banks want IFC involved with the deal of mozal project? What does IFC bring to the deal? Will IFC and the sponsors (Alusaf and IDC) share similar objectives?

  Describe some common ways to delay recognition of gains

Describe some common ways to delay recognition of gains from the disposal or sale of property. Give some examples.

  What is its bond equivalent yield

A T-bill with face value $10,000 and 89 days to maturity is selling at a bank discount ask yield of 3.6%. a. What is the price of the bill? What is its bond equivalent yield? What is the price of the bill?

  Beta coefficient associated with a portfolio return

Katherine Wilson is wondering how much risk she must undertake to generate an acceptable return on her porfolio. The risk free return is currently 7%. The return on the average stock (market return) is 9%. Use the CAPM to calculate the beta coefficie..

  Donors gross estate for federal estate tax purposes

Which of the following is (are) among the exceptions to the general rule that property given within three years of death is excluded from the donor’s gross estate for federal estate tax purposes?

  Calculate the expected return for the portfolio

You have decided to invest $70,000 in Stock Fund, and $30,000 in Bond. The returns for each fund are forecasted below: Fill in the portfolio’s forecasted return for a strong economy and a weak economy. Then calculate the expected return for the portf..

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