Two projects being considered are mutually exclusive

Assignment Help Financial Management
Reference no: EM132061235

Two projects being considered are mutually exclusive and have the following projected cash flows:

                              Project A     Project B

                  Year     Cash Flow     Cash Flow

                        0       -$50,000      -$50,000

                        1         15,625             0

                        2         15,625             0

                        3         15,625             0

                        4         15,625             0

                        5         15,625        99,500

If the required rate of return on these projects is 10 percent, find

a. which project has the higher NPV.

NPVa=

NPVb=

b. which project has the higher IRR.

IRRa=

IRRb=

which project has the higher MIRR.

MIRRa =

MIRRb =

Which project should be accepted by the company? Why?

Reference no: EM132061235

Questions Cloud

Should canyon invest in this opportunity : Should Canyon invest in this opportunity?
What is corps wacc after tax : The yield on firms outstanding debt is 6.5%. What is ABC Corps WACC after tax?
Discuss how the terms of the option will change : Discuss how the terms of the option will change, if it changes. If not, discuss how it affects the value of the option.
Which of the two projects should beta invest in : Which of the two Projects (if any) should Beta invest in?
Two projects being considered are mutually exclusive : Two projects being considered are mutually exclusive and have the following projected cash flows: which project has the higher NPV.
What is the company decision on this project : Calculate the NPV of this project and what is the company's decision on this project
Derivatives are used for risk exposure : The following derivatives are used for risk exposure. Is it positive or negative? How can it be interpreted?
Use binomial option model to price put options : How would you use binomial option model to price put options? Use binomial model and not the put-call parity for this question.
Adjustment free cash flow : Adjustment Free Cash Flow from the net working capital changes

Reviews

Write a Review

Financial Management Questions & Answers

  Impact of futures hedge

Explain how the probability distribution of a financial institution's returns is affected when it uses interest rate futures to hedge. What does this imply about its risk?

  The loan has a five-year term with monthly payments

You have just purchased a car and taken out a $51,000 loan. The loan has a five-year term with monthly payments of $997.87 and an APR of 6.5%. How much will you pay in interest, and how much will you pay in principal during the first month? What is y..

  About a real estate appraisal

Which of the following statements is NOT TRUE about a real estate appraisal? A property produces a first-year NOI of $74,000. Both the income and property value are expected to increase by 3% per year. What is the indicated property value using a 10%..

  Not-for-profit acute care facility

General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services:

  What is the company market capitalization

What is the company's market capitalization, assuming the market is at equilibrium?

  Through an account with a nominal interest rate

Stuart wishes to have $14,000 to buy a used car three years from now. He plans to accomplish this, through an account with a nominal interest rate of 3% compounded monthly, by depositing $300 at the end of each month during the first year, and Q at t..

  What is the new market value of company

What is the new market value of the company? How many rights are associated with one of the new shares?

  What is the flotation cost adjustment

Barton industries expects next year's annual dividend to be $1.50 and it expects dividends to grow at a constant rate of 4.2 The firm's current common stock price is $20.30 If it needs to issue new common stock the firm will encounter a 5.3 flotation..

  What will jim pay for state and federal unemployment taxes

Assume a state SUTA rate of 5.1%. What will Jim pay for state and federal unemployment taxes for the first quarter?

  Market value analysis

Lei Materials' balance sheet lists total assets of $1.16 billion, $132 million in current liabilities, $415 million in long-term debt, $613 million in common equity, and 58 million shares of common stock. If Lei's current stock price is $52.08, what ..

  Recreate the firms cash flow statement for the year

You have just been hired as a financial analyst for Basel Industries. Unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. So, your first job will be to recreate the firm's cash flow statement for..

  What is the net new long-term debt

During 2014, Raines Umbrella Corp. had sales of $700,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $500,000, $90,000, and $95,000, respectively. what is the net new long-term debt?

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