Compute internal rate of return, Business Economics

Assignment Help:

You are evaluating two (mutually exclusive) methods of strip-mining a resource-rich area. The alternatives are very similar, though one important difference is in the scale of the two projects.

Here are the estimated cash flows:

                                t=0       t=1       t=2       t=3      

Method A                   -205     -30       1055    -862

Method B                   -100     -20       525      -425    

a. If your firm's discount rate for strip-mining projects is 20%, which project do you prefer and why?

b. Each method has two IRRs. Compute all four IRRs to at least one decimal place (e.g. 12.3%).

c. i. Under what discount rate assumptions are you indifferent between the two projects?

ii. Compute to at least one decimal place and explain what you should do (Accept? Reject? Other?)  If your discount rate made you indifferent between the two methods.


Related Discussions:- Compute internal rate of return

Evaluating projects incrementally, Ask What is the meaning of evaluating pr...

Ask What is the meaning of evaluating projects incrementallyquestion #Minimum 100 words accepted#

CORPORATE STRATEGY, WHAT STRATEGIES ARE SUGGESTED FROM THE CONVENTIONAL VIE...

WHAT STRATEGIES ARE SUGGESTED FROM THE CONVENTIONAL VIEW OF THE INDUSTRY LIFE CYCLE

Standard deviation of the sample of interest rates, The following data show...

The following data show the interest rates on 4 randomly chosen personal loans (in percents): 6.1, 5.7, 11.1, 9. Calculate the standard deviation of the sample of interest rates. (

Explain the mixed economy system, Explain the mixed economy system. Mix...

Explain the mixed economy system. Mixed economy: Several resources are owned through the public sector (government) and several resources are owned through the private sector o

Effective private sector involvement, Problem 1: (a) The Mauritian gove...

Problem 1: (a) The Mauritian government is now increasingly involving the private sector in the development of the economy. How can government support effective private sector

Assignment, Assignment on discounting principle

Assignment on discounting principle

What is the infant industry argument, What is the Infant Industry argument?...

What is the Infant Industry argument? Several governments seek to protect involving industries by premature competition. Infant industries have potential comparative benefit b

Commercial banking, advantages and disadvantages of commercial banking

advantages and disadvantages of commercial banking

Is unemployment and underemployment a problem, Is unemployment and underemp...

Is unemployment and underemployment a problem? The cost of unemployment is both: • Economic along with the opportunity cost of lost output raised poverty and inequality

Write Your Message!

Captcha
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