Determine each projects net present value

Reference no: EM13196444

It's time to decide how to use the money your firm is expected to make this year. Two investment opportunities are available, with net cash flows as follows:

Year Project X Project Y

0 (Now) ($20,000) ($20,000)

1 8,500 4,200

2 7,000 5,700

3 5,500 7,200

4 4,000 8,700

a. Calculate each project's Net Present Value (NPV), assuming your firm's weighted average cost of capital (WACC) is 7%

b. Calculate each project's Internal rate of Return (IRR).

c. Plot NPV profiles for both projects on a graph).

d. Assuming that your firm's WACC is 10%:

(1) If the projects are independent which one(s) should be accepted?

(2) If the projects are mutually exclusive which one(s) should be accepted?

Reference no: EM13196444

Questions Cloud

Find both the width of the square dining room : an architect has allocated a rectangular space of 429 sq ft for a square dining room and a 20 ft wide kitchen. Find both the width of the square dining room and the length of the entire rectangular space

Find the probability that don flipped a head on that trial : At each trial of a game, Don and Greg flip biased coins, simultaneously but independently. For each trial, the probability of heads is pD and pG for Don and Greg, respectively.

What is the firms cost of capital : On the basis of this information, what is the company's optimal capital structure, and what is the firm's cost of capital at this optimal capital structure?

What percentage of the bearings produced will not acceptable : Suppose, however, that the setting has changed during the course of production, so that the distribution of the diameters produced is well approximated by a normal distribution with mean 0.399 in. and standard deviation 0.002 in. What percentage o..

Determine each projects net present value : Calculate each project's Net Present Value (NPV), assuming your firm's weighted average cost of capital and calculate each project's Internal rate of Return (IRR).

Air pollution is an environmental health problem : Air pollution is an environmental health problem in many cities in the world. Residents in an urban community through which a major freeway transportation route runs are suffering from a number of health effects.

Explain ethyl chloride in the williamson ether synthesis : Give two reasons why ethuyl iodide is preferred over ethyl chloride in the Williamson ether synthesis.

Find out the quantity supplied to a cost function : A cost function for clinic visits in a small inner city clinic. determine the marginal cost for each level of output.

Food safety problem : There has been several complaints in your community about dirty restaurants. Several restaurants are no longer in business as a result of a television expose. You are the head of a citizen task force and have been asked to make recommendations for im..

User Account

All Pages