Mf1. 1. If two projects offer the same positive NPV, then they:( )A.also have the same IRR.B.have the same payback period.C.are mutually exclusive projects.D.add the same amount of value to the firm.2. If a project has a payback period of 3 years and a cost of capital of 10%,then the discounted payback will: ( )A.exceed 3 years.be less than 3 years.decrease if the cost of capital increases.B.C.D.decrease if the payback period increases due torevised cash flows.3. A currently used machine costs $10,000 annually to run. What is the maximumthat should be paid to replace the machine with one that will last 3 yearsand cost only $4,000 annually to run? The opportunity cost of capital is12% ( )A.$15, 209.84B.$9, 607.33C.$14, 410.99$10, 338.56D.

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Description: Mf1. 1. If two projects offer the same positive NPV, then they:( )A.also have the same IRR.B.have the same payback period.C.are mutually exclusive projects.D.add the same amount of value to the firm.2. If a project has a payback period of 3 years and

NPV solely conveys value addition. NPV cannot be used to predict the timing of cash flow in any way.…

Business

Finance

1. If two projects offer the same positive NPV, then they: ( ) A. also have the same IRR. B. have the same payback period. are mutually exclusive projects. add the same amount of value to the firm. D.

1. If two projects offer the same positive NPV, then they: ( ) A. also have the same IRR. B. have the same payback period. are mutually exclusive projects. add the same amount of value to the firm. D.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 13P

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a. They payback period of project A is ___ years (round to two decimal places) The payback period of project B is ____ years. (round to two decimal places) According to the payback method, which project should the firm choose? b. The NPV of project A is $___ The NPV of project B is $___ c. The IRR of project A is ___ The IRR of project B is ___ d. Make a reccomendation
4. If the terminal balance of a 5-year project at 10% s0 then which one below is true? A. The IRR of the project is less than 10% B. The future worth of the project is greater than 0 C. Discounted payback perlod is 5 years OD. The present worth of the project is less than 0 5 In an incremental IRR analysis, which analysis period should be used to compare 2 mutually altemative projects with 3 and 4 years of useful lives? (Assume an indefinite analynis perlod and that the projects are repeatable) O A. B years O B. 12 years OC. 4 years D. 3 years
What is the payback period on each of the above projects? Given that you wish to use the payback rule with a cutoff period of two years, which projects would you accept? Why? If you use a cutoff period of three years, which projects would you accept? Why? If the opportunity cost of capital is 10%, which projects have positive NPVs? How do you know? “If a firm uses a single cutoff period for all projects, it is likely to accept too many short-lived projects.” Is this statement true or false? How do you know? If the firm uses the discounted-payback rule, will it accept any negative NPV projects? Will it turn down any positive NPV projects? How do you know?
If the WACC is changed to 5%, which of the following will occur? A. The NPV, the IRR and the MIRR will change B. The NPV and the IRR will change, but the MIRR will NOT change C. The NPV and the MIRR will change, but the IRR will NOT change D. The NPV, the IRR and the MIRR will all remain the same. A firm has a project with the following cash flows (in Millions). The WACC for the firm is 8.25%. Year 012 Cash Flows $ 45 SSS $ $ 3 $ 4 $ ss $ (325.00) 59.00 67.00 88.00 135.00 77.00
Consider these two alternatives. Solve, a. Suppose that the capital investment of Alternative 1 is known with certainty. By how much would the estimate of capital investment for Alternative 2 have to vary so that the initial decision based on these data would be reversed? The annual MARR is 15% per year. b. Determine the life of Alternative 1 for which the AWs are equal.
Consider two investment projects, which both require an upfront investment of $9 million, and both of which pay a constant positive amount each year for the next 9 years. Under what conditions can you rank these projects by comparing their IRRS? (Select the best choice below.) O A. There are no conditions under which you can use the IRR to rank projects. O B. Ranking by IRR will work in this case so long as the projects' cash flows do not decrease from year to year. O C. Ranking by IRR will work in this case so long as the projects' cash flows do not increase from year to year. O D. Ranking by IRR will work in this case so long as the projects have the same risk.
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. Time Project A Cash Flow Project B Cash Flow Use the payback decision rule to evaluate these projects, which one(s) should it be accepted or rejected? Multiple Choice 0 -35,000 -45,000 1 25,000 25,000 2 45,000 5,000 3 16,000 65,000
Suppose an investment has an initial capital cost of $1100, an ongoing cost of $6.50 per year and an annual benefit of $80. If the project lasts for 20 years and the discount rate is 7%, the internal rate of return is: Provide your answer in percentage form (e.g. an IRR of 17.66% should be entered as 17.66) to 2 decimal places. Do not include any $ or % 's in your response.
Consider the following two investment alternatives:The firm's MARR is known to be 15%.(a) Compute the PW (15%) for Project A. (b) Compute the unknown cash flow X in years 2 and 3 for Project B.( c) Compute the project balance (at 15%) for Project A at the end of year 3.( d) If these two projects are mutually exclusive alternatives, which project would you select?
Better plc is comparing two mutually exclusive projects, whose details are given below.The company’s cost of capital is 12 per cent.Project A Project B£m £mYear 0 (150) (152)Year 1 40 80Year 2 50 80Year 3 60 50Year 4 60 40Year 5 80 30(a). Using the net present value method, which project should be accepted?(b). Using the internal rate of return method, which project should be accepted?(c). If the cost of capital increases to 20 per cent in year 5, would your advice change? Hello.i have the solution you send me but i am trying to understand where did you get the calculations for in the worknotes tabel. I did my own calculation but i dont get the same answer. For example for year 2 for project A you have 39.8597 How did you get to that without using the formula in excel. I need to write down the actual numbers. I got 22.3214 some im not sure how you got to that number. Can you help me please? Thank you
Better plc is comparing two mutually exclusive projects, whose details are given below.The company’s cost of capital is 12 per cent.Project A Project B£m £mYear 0 (150) (152)Year 1 40 80Year 2 50 80Year 3 60 50Year 4 60 40Year 5 80 30(a). Using the net present value method, which project should be accepted?(b). Using the internal rate of return method, which project should be accepted?(c). If the cost of capital increases to 20 per cent in year 5, would your advice change? Hello.i have the solution you send me but i am trying to understand where did you get the calculations for in the worknotes tabel. I still cant calculate the IRR.i really dont understand how to do it. Can you help me please by using the numbers in the tabel so i can understand what is that you are adding or taking away please? I know how to calculate the NPV but not the IRR. I have went over and over this IRR but i still dont understand how you calculate it using the pv and the npv.i dont wanna use excel.
Better plc is comparing two mutually exclusive projects, whose details are given below.The company’s cost of capital is 12 per cent.Project A Project B£m £mYear 0 (150) (152)Year 1 40 80Year 2 50 80Year 3 60 50Year 4 60 40Year 5 80 30(a). Using the net present value method, which project should be accepted?(b). Using the internal rate of return method, which project should be accepted?(c). If the cost of capital increases to 20 per cent in year 5, would your advice change? Hello.i have the solution you send me but i am trying to understand where did you get the calculations for in the worknotes tabel. I still cant calculate the IRR.i really dont understand how to do it. Can you help me please by using the numbers in the tabel so i can understand what is that you are adding or taking away please? I know how to calculate the NPV but not the IRR