Mutually exclusive projects with npvs and project lives

Assignment Help Financial Management
Reference no: EM131563370

ABC has been considering two mutually exclusive projects with the following NPVs and project lives.

Project NPV Economic Life

A 5,000 3 years

B 6,500 5 years

ABC’s cost of capital is 15%. Assuming that projects can be repeated with the same cash flow and risk profiles what would be the respective Net Terminal Values of projects A and B (round to the next integer)? What should be the decision?

A. 14,599 and 12,927, Accept A

B. 2,190 and 1,939, Accept A

C. Accept both A and B

D. 33,333 and 43,333, Accept B

Reference no: EM131563370

Questions Cloud

Calculating project cash flows and? npv : What is the initial outlay associated with this? project? Should this machine be? purchased?
Difference between present value of the settlement : What is the difference between the present value of the settlement at 4 percent and 9 percent?
Value of net income available to common stockholders : Calculate the 2015 value of net income available to common stockholders for Jake’s Jamming Music, Inc.
Compute weighted average cost of capital : Compute the weighted average cost of capital. Which project(s) should be accepted?
Mutually exclusive projects with npvs and project lives : ABC has been considering two mutually exclusive projects with the following NPVs and project lives.
Product manager of major computer manufacturer : You are a product manager of a major computer manufacturer. What is the best decision for the company, make or buy?
Rewrite the email : Rewrite the email, OSHA inspectors visiting our location to ensure that our work environment meets safety regulations. It is imperative to take extra caution
Explain the elements of the chosen treatment model : Describing in detail the elements of the student's chosen treatment model and identifying situations in which the model would be used.
Determine the weighted-average contribution margin per unit : Tiago makes three models of camera lens. Its product mix and contribution margin per unit follow: Determine the weighted-average contribution margin per unit

Reviews

Write a Review

Financial Management Questions & Answers

  Which of the events would an auditor issue

For which of the following events would an auditor issue a report that does not include any reference to consistency?

  What is price of consolidated stock-market value of equity

Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 2.1 million shares that are outstanding. Shareholders require a 10% rate of return from Consolidated stock. what is the price of consolidated stock? ..

  What amount that bill received is subject to payroll taxes

Compute Bill’s payroll and self-employment income taxes. What amount that Bill received is subject to payroll taxes?

  Implied value of the roe on future investment opportunities

The FI Corporation's dividends per share are expected to grow indefinitely by 5% per year. If this year's year-end dividend is $10.00 and the market capitalization rate is 12% per year, what must the current stock price be according to the DDM? If th..

  What must the expected return on the market be

A stock has an expected return of 10.5 percent, its beta is 1, and the risk-free rate is 6.25 percent. What must the expected return on the market be?

  What is the end-of-year nav for the fund

The fee is imposed on year-end asset values. If there are no distributions, what is the end-of-year NAV for the fund?

  Expected earnings stream for sprint

The expected earnings stream for Sprint for the next three years is expected to be $40,000, $50,000, and $50,000 respectively (assume the firm falls off the face of the earth in three years as we did in class). Meanwhile, interest rates are expected ..

  Increase the discretionary financing

All of the following will increase the discretionary financing needed EXCEPT:

  What annual rate of return did coin return

what annual rate of return did this coin return for lucky numismatist?

  The current risk-free rate of return-market risk premium

The current risk-free rate of return is 4% and the market risk premium is 5%. If the beta coefficient is 2.0, what is the stock’s required rate of return? A. 14.0% B. 5.0% C. 18.0% D. 4.5% E. 13.0%

  Determinants of interest rate for individual securities

Determinants of Interest Rate for Individual Securities A particular security's default risk premium is 3.50 percent. For all securities, the inflation risk premium is 2.25 percent and the real interest rate is 3.00 percent. The security's liquidity ..

  What was the annual percentage increase

In 1901, the first U.S. Open Golf Championship was held. The winner’s prize money was $210. In 2012, the winner’s check was $1,410,000. Requirement 1: What was the annual percentage increase in the winner’s check over this period? ** I've answered Re..

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