Lithium inc is considering two mutually exclusive projects

Assignment Help Finance Basics
Reference no: EM13570913

Lithium Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000in year one and $75,000 in year two. Project B costs 120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three and $45,000 in year four. Lithium Inc's rate of return for these projects is 10%. The modified internal rate of return for Project B is:

A. 18.52%

B. 17.84%

C. 19.75%

D. 22.80%

Reference no: EM13570913

Questions Cloud

Big chuck wishes to maintain a 10000 minimum cash balance : big chuck wishes to maintain a 10000 minimum cash balance at all times. additional financing is available and retired
The expected dividend is 150 for a share of common : the expected dividend is 1.50 for a share of common stockpriced at 15. what is the cost of internal common equity if
Technology can provide an advantage to governments and : technology can provide an advantage to governments and private agencies in their plans and capabilities to cope with
When performing basic cvp analysis variable costs are : the scattergraph method is an approach which can be used to determine both the total fixed cost component and the
Lithium inc is considering two mutually exclusive projects : lithium inc. is considering two mutually exclusive projects a and b. project a costs 95000 and is expected to generate
What is the accounting rate of return for a project that : what is the accounting rate of return for a project that is estimated to yield total income of 345000 over three years
Watney inc purchased 25000 of 6 hamel bonds at par on july : watney inc. purchased 25000 of 6 hamel bonds at par on july 1 2013. the bonds pay interest semiannually. watney intends
How much will you have in a savings account in 10 years if : how much will you have in a savings account in 10 years if you deposit 1800 in the account at the end of each year and
Summit corp is considering the purchase of a new piece of : summit corp is considering the purchase of a new piece of equipment. the cost savings from the equipment would result

Reviews

Write a Review

Finance Basics Questions & Answers

  The company recently reported that its basic earning power

russell securities has 100 million in total assets and its corporate tax rate is 40. the company recently reported

  Define a horizontal merger

List one benefit of trading halts for publicly listed companies as a way of managing information made available to the public, and list two disadvantages of trading halts.

  What is the rate of return on your savings

Today completes your 17th year of saving and you now have $6,528.91 in this account. What is the rate of return on your savings?

  What percentage of your salary must you save each year

Your salary will increase at 4.1 percent per year, and you can earn a 12.1 percent return on the money you invest. If you save a constant percentage of your salary, what percentage of your salary must you save each year?

  Estimate the yield dunley would have to pay if it were

In fact, one might expect risk premia and betas to increase in recessions. Redo part (b) assuming that the market risk premium and the beta of debt both increase by 20%; that is,they equal 1.2 times their value in recessions.

  What is the standard deviation of your portfolio

Suppose now that your portfolio must yield an expected return of 12% and be efficient, that is, on the best feasbile CAL. What is the standard deviation of your portfolio? And what is the proportion invested in the stock fund?

  What is the expected return on the market

The stock of Big Joe's has a beta of 1.32 and an expected return of 11.70 percent. The risk-free rate of return is 4.2 percent. What is the expected return on the market?

  What are the two definitions of cash and why do corporate

what are the two definitions of cash and why do corporate treasurers often use the second

  Discuss the effect of higher interest rates

Mike Lane will have $5 million to invest in 5 year United State Treasury bonds three months from now. Lane believes interest rates will fall during the next 3 months and wants to take advantage of prevailing interest rates by hedging against a declin..

  Managing exchange rate risk

Assume China suddenly decided to change its mind. Overnight, instead of increasing its value China decided to devalue downwards the Yuan by 20% in order to increase the attractiveness of its exports.

  Assume that the dollar is presently weak and is expected to

u.s -based mncs commonly invest in foreign securitiesa assume that the dollar is presently weak and is expected to

  Consider three alternative policies each with a different

consider three alternative policies each with a different set of outcomes in terms of output and inflation as shown in

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