5. You are considering the following two mutually exclusive projects. The required rate of return is 14.6 percent for project A and 13.8 percent for project B. Which project should you accept and why?
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- 3) could you use the Figure below that shows the net present value profile of two projects Y and W to answer the following questions: What is the internal rate of return on project Y? Determine the “approximate” discount rate at which you would be indifferent between the two projects Find the “approximate” net present value of project W when the discount rate is 4%.Answer this question as it is pertaining to two MUTUALLY EXCLUSIVE projects on the following figure. If r=6%, which project would you choose by using the net present value (NPV) as the criterion? Group of answer choices Project A Project B Neither EitherUsing image: a-1. What is the payback period for each project a-2. If you apply the payback criterion, which investment will you choose? b-1. What is the discounted payback period for each project? b-2. If you apply the discounted payback criterion, which investment will you choose? c-1. What is the NPV for each project? c-2. If you apply the NPV criterion, which investment will you choose? d-1. What is the IRR for each project? d-2. If you apply the IRR criterion, which investment will you choose? e-1. What is the profitability index for each project? e-2. If you apply the profitability index criterion, which investment will you choose? f. Based on your answers in (a) through (e), which project will you finally choose?
- Consider the following two mutually exclusive projects (W and Z). -The table- Whichever project you choose, if any, you require a 12 percent return on your investment.(a) Calculate the payback period for each project.(b) Calculate the net present value (NPV) of each project(c) Based on your answers in (a) and (b), which project will you finally choose? Explain.1. Calculate the net present value for each project. 2. Calculate the simple rate of return for each product.3. Which of the two projects (if either) would you recommend that Batelco Inc. accept? Why?A. Calculate the profitability index for project X. B. Calculate the profitability for project Y C. Using the NPV method combined with the PI aporoach, which project would you select? Use a discount rate of 13 percent
- Your firm uses the IRR method and asks you to evaluate the following mutually exclusive projects: Using the appropriate IRR method, evaluate these proposals assuming a required rate of return of 10 per cent. Compare your answer with the net present value method.a. Calculate the projects’ NPVs, IRRs, MIRRs, regular paybacks, and discounted paybacks.b. If the two projects are independent, which project(s) should be chosen?c. If the two projects are mutually exclusive and the WACC is 10%, which project(s)should be chosen?d. Plot NPV profiles for the two projects. Identify the projects’ IRRs on the graph.e. If the WACC was 5%, would this change your recommendation if the projects weremutually exclusive? If the WACC was 15%, would this change your recommendation?Explain your answers.f. The crossover rate is 13.5252%. Explain what this rate is and how it affects the choicebetween mutually exclusive projects.g. Is it possible for conflicts to exist between the NPV and the IRR when independentprojects are being evaluated? Explain your answer.h. Now look at the regular and discounted paybacks. Which project looks better whenjudged by the paybacks?i. If the payback was the only method a firm used to accept or reject projects, what paybackshould it…What are the internal rates of return (IRR) on the three projects? Does the IRR rule in this case give the same decision as NPV? How do you know? If the opportunity cost of capital is 11%, what is the profitability index for each project? Please analyze if, in general, decisions based on the profitability index are consistent with decisions based on NPV. What is the most generally accepted measure to choose between the projects? Please justify your answer. Project A -5000 +1000 +1000 +3000 0 B -1000 0 +1000 +2000 +3000 C -5000 +1000 +1000 +3000 +5000 I will need full analysis (qualitative examples and references citations and examples of relative current investments of big companies.
- Under what conditions might you find more thanone IRR for a project? How would you decidewhether or not to accept the project? If you werecomparing two mutually exclusive projects, onewith a single IRR of 12% and the other with two different IRRs of 10% and 15%, how should youchoose between the projects?You are considering the following two mutually exclusive projects. The crossover rate between these two projects is ___ percent and Project ___ should be accepted if the required return is greater than the crossover rate. Year : Project A : Project B 0 : −$ 29,000 : −$ 29,000 1 : 11,000 : 19,120 2 : 11,000 : 9,000 3 : 19,000 : 11,140Projects A and B are mutually exclusive. If project A, the larger project, has an approximate ERR of 20 percent and project B has an approximate ERR of 13 percent, which project is better if MARR=10 percent? O A The incremental ERR method is required to determine the better project. Neither A nor B is valid. B * For our purposes, a project is valid if its internal rate of return (IRR) is less than MARR. equal to or larger than MARR. less than 0 percent. larger than MARR.