What are the projects’ Np Vs assuming the WACK is 5%?

Your division is considering two projects with the following cash flows (in millions):

0 1 2 3
Project A -$29 $15 $13 $3
Project B -$16 $8 $3 $6

 

  1. What are the projects’ Np Vs assuming the WACK is 5%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.

    Project A    $   million

    Project B    $   million

    What are the projects’ Np Vs assuming the WACK is 10%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.

    Project A    $   million

    Project B    $   million

    What are the projects’ Np Vs assuming the WACK is 15%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.

    Project A    $   million

    Project B    $   million

  2. What are the projects’ Ir Rs assuming the WACK is 5%? Round your answer to two decimal places.

    Project A   %

    Project B   %

    What are the projects’ Ir Rs assuming the WACC is 10%? Round your answer to two decimal places.

    Project A   %

    Project B   %

    What are the projects’ Ir Rs assuming the WACK is 15%? Round your answer to two decimal places.

    Project A   %

    Project B   %

  3. If the WACK were 5% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 5.9%.)

    Pick Project A or B or Neither

    If the WACK were 10% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 5.9%.)

    Pick Project A or B or Neither

    If the WACK were 15% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 5.9%.)

    Pick Project A or B or Neither

     

    A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:

     

    0 1 2 3 4
    Project S -$1,000 $884.15 $260 $5 $10
    Project L -$1,000 $10 $240 $400 $769.20

     

    The company’s WACK is 9.5%. What is the IRE of the better project? (Hint: The better project may or may not be the one with the higher IRE.) Round your answer to two decimal places.

    %

     

    Project K costs $55,801.73, its expected cash inflows are $12,000 per year for 10 years, and its WACK is 10%. What is the project’s IRE? Round your answer to two decimal places

     

    Capital budgeting criteria: mutually exclusive projects

    Project S costs $19,000 and its expected cash flows would be $6,500 per year for 5 years. Mutually exclusive Project L costs $42,500 and its expected cash flows would be $14,000 per year for 5 years. If both projects have a WACK of 13%, which project would you recommend?

    Select the correct answer.

     

    I. Both Projects S and L, since both projects have IRS’s > 0.
    II. Both Projects S and L, since both projects have NPR’s > 0.
    III. Project S, since the NP’S > NP.
    IV. Neither S or L, since each project’s NOV < 0.

    Capital budgeting criteria: mutually exclusive projects

    A firm with a WACK of 10% is considering the following mutually exclusive projects:

    0 1 2 3 4 5
    Project A -$500 $75 $75 $75 $170 $170
    Project B -$450 $350 $350 $80 $80 $80

     

    Which project would you recommend?

    Select the correct answer.

    I. Project B, since the NP VB > NOVA.
    II. Both Projects A and B, since both projects have NPR’s > 0.
    III. Neither A or B, since each project’s NOV < 0.
    IV. Project A, since the NOVA > NP VB.
    V. Both Projects A and B, since both projects have IRS’s > 0.

    Project K costs $35,000, its expected cash inflows are $10,000 per year for 10 years, and its WACK is 14%. What is the project’s NOV? Round your answer to the nearest cent.

     

     

Type of paper Academic level Subject area
Number of pages Paper urgency Cost per page:
 Total: