Which project has a higher IRR

Assignment Help Financial Management

Reference no: EM131554111

A company is evaluating two different projects, both of which cost $25 million and last 6 years. Both projects have positive NPVs when using a cost of capital of 18%, and using that cost of capital makes Project A’s Profitability Index 1.25 and Project B’s Profitability Index 1.30. Their NPVs are the same when using a cost of capital of 15%.

1. Which project has a higher IRR?

2. Which project has a higher NPV when the cost of capital used to find NPV is 13%?

3. If Project A had two IRRs, one at 12% and the other at 26%. Would Project A’s NPV be positive or negative if a cost of capital of 11% was used to find NPV?

4. What is the NPV for each project?

Reference no: EM131554111

Questions Cloud

Three-letter acronyms are common in the business world : Three-letter acronyms are common in the business world. For example, in Java you use the IDE (Integrated Development Environment) in the JDK

Deducting amount of capital required to fund annuity due : What is the estimated profit your insurance company can expect to have at end of 35 years after deducting amount of capital required to fund your annuity due.

How would you fix the program : How would you fix the program so it terminates when the user enters a Fahrenheit temperature less than the possible minimum temperature?

Discuss four specific information systems : Identify and briefly discuss four specific information systems that are used to fight crime.

Which project has a higher IRR : A company is evaluating two different projects, both of which cost $25 million and last 6 years. Which project has a higher IRR?

Write a business plan for one of the two given ventures : Write a business plan for one of the two following ventures: Expanding a one-store operation to a two-store operation.

Multiple precision arithmetic : A singly-linked list can be used to store large integers one digit at a time. For example, the integer 1234 could be stored in a list by storing 1 in the first.

Calculate the company book value debt to equity ratio : A company’s book value of equity is $200 million, and its book value cost of equity is 20%. Calculate the company’s book value debt to equity ratio.

Find out the optimum mix using graphical method : A firm makes 2 products X &Y and has a total production capacity of 9 tons per day, X & Y require the same production capacity.

User Account

All Pages