Suppose a company is considering two independent projects

Reference no: EM13396026

1.Suppose a company is considering two independent projects, Project A and Project B. The cash outlay for Project A is $14,000. The cash outlay for Project B is $20,000. The company's cost of capital is 12%. The following table shows the after-tax cash flows. For each project, compute the NPV, the IRR, the MIRR, and indicate the accept/reject decision.

Year	Project A	Project B
1	$4800	$6700
2	$4800	$6700
3	$4800	$6700
4	$4800	$6700

2.Suppose a company is considering two investment projects. Both projects require an upfront expenditure of $30 million. The company estimates that the cost of capital is 10% and that the investments will result in the following after-tax cash flows (in millions of dollars). Complete parts (a) through (e) below.

Year	Project A	Project B
1	$28	$10
2	$20	$15
3	$10	$20
4	$5	$25

a) Find the regular payback period for each project.

b) Find the discounted payback period for each project.

c) Assume that the two projects are independent and the cost of capital is 10%. Which project or projects should the company undertake? Base your results on the NPV.

d) Assume that the two projects are mutually exclusive and the cost of capital is 5%. Which project or projects should the company undertake? Base your results on the MIRR.

e) Explain why quantitative measures may not always be the best way to evaluate a project.

Reference no: EM13396026

Questions Cloud

To what kingdom would a single-celled nucleated : q1. to what kingdom would a single-celled nucleated photosynthetic organism belong?q2. what clues indicate that dogs

Resistance to change is a principal reason for failure of : resistance to change is a principal reason for failure of change management programs. planning for resistance and

Determine how do jims scores compare which was better give : jim is retaking statistics as part of his doctoral program. on his final in his ma program he received a 225. the class

Explain why are enzymes critical to the function of cells : 1 why are enzymes critical to the function of cells? that is why not simply let chemical reaction occur without

Suppose a company is considering two independent projects : 1.suppose a company is considering two independent projects project a and project b. the cash outlay for project a is

Identify the key stakeholders and their roles needed to : write a 1400- to 2100- word paper in which you complete the followingo state the primary reasons for the

The main goal of this exercise is for the student to : purposethe primary goal of this exercise is for the student to further examine evolution from the perspective of two

Analyze the challenges facing your company using od : you are the owner of a 100 employee retail dry goods store. you are located in a town where the major employer is an

The dayco manufacturing company had the following financial : 1.the robinson company had a cost of goods sold of 1000000 in 2011 and 1200000in2012.a. calculate the inventory

User Account

All Pages