What are the expected npv and irr of each project

Assignment Help Financial Management

Reference no: EM132073408

The Radford Company is faced with two mutually exclusive investment projects. Each costs $10,000 and each has an expected life of three years. Annual net cash flows from each project begin one year after the initial investment is made and have the following probability distribution.

Project A: Probability .3 .5 .2 Cash Flows 5,000 6,000 7,000

Project B: Probability .25 .6 .15 Cash Flows 2,000 5,000 8,000

The Radford company evalutes project A at 10% and project B at 12%

A. Compute the expected annual cash flow.

Project A ___ Project B___

B. What are the expected NPV and IRR of each project

Project A: NPV___ IRR____ Project B: NPV_____ IRR____

Reference no: EM132073408

Questions Cloud

How could the company maximize the long-term success : Doing so would mean going beyond "the westernized and the wealthy" targeting that had worked so well in relatively older and more affluent Asian markets.

What is the average cost per burger when the firm produces : What is the average cost per burger when the firm produces 2 million hamburgers?

Binomial option pricing model-fair value for call option : The risk free rate is 3%. Use the binomial option pricing model to find a fair value for the call option.

Explain the rationale for government intervention : Explain the rationale for government intervention on a policy issue from above of your choice. The response must be typed.

What are the expected npv and irr of each project : Compute the expected annual cash flow. What are the expected NPV and IRR of each project

What are its expected growth rate and its price : ABC stock has an expected ROE of 12%, expected EPS of $2, What are its expected growth rate and its price.

Discuss who the project stakeholders : Project communication is one of the most important factors in project management. A project manager will spend most of his/her time on communications.

Evaluate changing theories and practices in business : Evaluate changing theories and practices in business and their potential, positive impact on society.

Compute the price of coupon bond : Compute the price of a 3.8 percent coupon bond with 18 years left to maturity and a market interest rate of 7 percent?

User Account

All Pages