Project with the higher irr-how much value will be forgone

Assignment Help Financial Management

Reference no: EM131926371

Sexton 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 IRR, how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the project with the higher IRR will also have the higher NPV, so no value will be lost if the IRR method is used.

WACC: 11.50%

Year 0 1 2 3 4

CFS -$2,050 $ 750 $ 760 $ 770 $ 780

CFL -$4,300 $1,500 $1,518 $1,536 $1,554

Reference no: EM131926371

Questions Cloud

Burly bill and lightweight larry experienced : 360 lb Burly Bill shoves 78 lb Lightweight Larry across the room. How is it possible that Burly Bill and Lightweight Larry experienced the same force?

What is the required return for the winter time stocks : The company adheres to a constant rate of growth dividend policy. If the current stock price is $40, what is the required return for the Winter Time stocks?

Compute the taxable equivalent yield : A 3.60 percent coupon municipal bond has 14 years left to maturity and has a price quote of 95.45. The bond can be called in four years.

How the polarization of light is used : Explain how the polarization of light is used as evidence to support the transverse wave nature of light.

Project with the higher irr-how much value will be forgone : If the decision is made by choosing the project with the higher IRR, how much value will be forgone?

Talk briefly about the circumstances that led to the debt : Impact of Greece Crisis. Talk briefly about the circumstances that led to the debt crisis in Greece.

What angle should the student look for the third bright : The light has a wavelength of 625 nm and has passed through a diffraction grating with a slit separation of 2.80x10^-6 m.

What are your projected sales and profits at the skimming : What are your projected sales and profits at the skimming and penetration prices?What decision do you make?

What is the yield to call if the call price is given : What is the yield to call if the call price is only $1,110? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

User Account

All Pages