What is each alternative''s irr

Reference no: EM131183410

Capitol Healthplans, Inc., is evaluating two different methods for providing home health services to its members. Both methods involve contracting out for services, and the health outcomes and revenues are not affected by the method chosen. Therefore, the incremental cash flows for the decision are all outflows. Here are the projected flows:

a. What is each alternative's IRR?

b. If the cost of capital for both methods is 9 percent, which method should be chosen? Why?

Reference no: EM131183410

Questions Cloud

What is the project''s payback : Winston Clinic is evaluating a project that costs $52,125 and has expected net cash inflows of $12,000 per year for eight years. The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12 percent.

More volatility in cash flow and therefore price volatiilty : An issuer is trying to structure a floating rate tranche in a CMO offering. The tranche will be backed by mortgages with 8% interest rate and current balance of $2000000. Interest payable to investors in the floating rate securities (F) and investors..

What is the present value of the projects terminal value : You are the financial manager of a firm that is contemplating investing in a new project that you expect will generate cash flows of $10,000 per year for five years and then $15,000 per year for another two years. What is the present value of the pro..

Bond pay a higher coupon rate : Assume you are evaluating whether to purchase the following $1,000 face value bonds: Assuming both bonds were issued at the same time, why would the Co. Y bond pay a higher coupon rate?

What is each alternative''s irr : If the cost of capital for both methods is 9 percent, which method should be chosen? Why?

Chlorine gas according to the equation : Elemental phosphorus reacts with chlorine gas according to the equation: A reaction mixture initially contains 46.01 gP4 and 131.0 gCl2.

Price of put option necessary to guarantee your sales price : You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1,260,000. Over the past five years, the price of land in the area has increased 8 percent per year, with an annual standard deviation of 37 percent. W..

What is the firms weighted average cost of capitial : Unfortunately, the company has fallen on hard times. The 5 million shares are trading for only $4 apiece and the market value of its debt securities is 20% below face (book) value. Because of the comapny's large cumulative, it will pay no taxes on fu..

Conduct a project that fall in computing and it curriculum : Choose to conduct a project that is technical (i.e. practically based e.g. development of a prototype, simulation, design framework etc) that fall with in computing and IT curriculum.

User Account

All Pages