Garage, Inc., has identified the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B) 0 â$ 29,100 â$ 29,100 1 14,500 4,350 2 12,400 9,850 3 9,250 15,300 4 5,150 16,900
a-1 What is the IRR for each of these projects? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
IRR Project A % Project B %
a-2 Using the IRR decision rule, which project should the company accept?
Project A Project B
a-3 Is this decision necessarily correct? Yes No
b-1 If the required return is 12 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
NPV Project A $ Project B $
b-2 Which project will the company choose if it applies the NPV decision rule? Project A Project B
c. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Discount rate %
| Garage, Inc., has identified the following two mutually exclusive projects: |
| Year | Cash Flow (A) | Cash Flow (B) | |||||
| 0 | â$ | 29,100 | â$ | 29,100 | |||
| 1 | 14,500 | 4,350 | |||||
| 2 | 12,400 | 9,850 | |||||
| 3 | 9,250 | 15,300 | |||||
| 4 | 5,150 | 16,900 | |||||
| a-1 | What is the IRR for each of these projects? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) |
| IRR | ||
| Project A | % | |
| Project B | % | |
| a-2 | Using the IRR decision rule, which project should the company accept? | ||||
|
| a-3 | Is this decision necessarily correct? | ||||
|
| b-1 | If the required return is 12 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) |
| NPV | ||
| Project A | $ | |
| Project B | $ | |
| b-2 | Which project will the company choose if it applies the NPV decision rule? | ||||
|
| c. | At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| Discount rate | % |
Related questions
Garage, Inc., has identified the following two mutually exclusive projects:
| YEAR | CASH FLOW A | CASH FLOW B |
| 0 | $-29300.00 | $-29300.00 |
| 1 | 14700.00 | 4450.00 |
| 2 | 12600.00 | 9950.00 |
| 3 | 9350.00 | 15500.00 |
| 4 | 5250.00 | 17100.00 |
What is the IRR for each of these projects? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
IRR=
Project A %
Project B %
Using the IRR decision rule, which project should the company accept? Project A OR Project B?
Is this decision necessarily correct? YES OR NO?
If the required return is 11 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
NPV=
Project A $=
Project B $=
Which project will the company choose if it applies the NPV decision rule? Project A OR Project B?
At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Discount rate %=
| Garage, Inc., has identified the following two mutually exclusive projects: |
| Year | Cash Flow (A) | Cash Flow (B) | |||||
| 0 | â$ | 28,900 | â$ | 28,900 | |||
| 1 | 14,300 | 4,250 | |||||
| 2 | 12,200 | 9,750 | |||||
| 3 | 9,150 | 15,100 | |||||
| 4 | 5,050 | 16,700 | |||||
| a-1 | What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| IRR | ||
| Project A | % | |
| Project B | % | |
| a-2 | Using the IRR decision rule, which project should the company accept? | ||||
|
| a-3 | Is this decision necessarily correct? | ||||
|
| b-1 | If the required return is 10 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| NPV | ||
| Project A | $ | |
| Project B | $ | |
| b-2 | Which project will the company choose if it applies the NPV decision rule? | ||||
|
| c. | At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Discount rate ? | % |
Romboski, LLC, has identified the following two mutually exclusive projects:
| Year | Cash Flow (A) | Cash Flow (B) | ||||||
| 0 | â$ | 65,000 | â$ | 65,000 | ||||
| 1 | 41,000 | 27,500 | ||||||
| 2 | 35,000 | 31,500 | ||||||
| 3 | 23,500 | 37,000 | ||||||
| 4 | 15,000 | 24,500 | ||||||
| Requirement 1: | |
| (a) | What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answer as a percentage roundedto 2 decimal places (e.g., 32.16).) |
| Internal rate of return | |
| Project A | % |
| Project B | % |
| (b) | If you apply the IRR decision rule, which project should the company accept? |
| Requirement 2: | |
| (a) | Assume the required return is 11 percent. What is the NPV for each of these projects? (Do not round intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16).) |
| Net present value | |
| Project A | $ |
| Project B | $ |
| (b) | Which project will you choose if you apply the NPV decision rule? |
| Requirement 3: | |
| (a) | Over what range of discount rates would you choose Project A? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Project A |
| @ % |
| (b) | Over what range of discount rates would you choose Project B? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Project B |
| @ % |
| (c) | At what discount rate would you be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Discount rate | % |
