Maurice Tutor

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About Maurice Tutor

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Expertise:
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Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 398 Weeks Ago, 2 Days Ago
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Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 09 Oct 2017 My Price 9.00

calculator solutions.

Consider the following projects, X and Y where the firm can only choose one. Project X costs $1500 and has cash flows of $678, $652, $347, $111, $54, $16 in each of the next 6 years. Project Y also costs $1500, and generates cash flows of $738, $693, $405 for the next 3 years, respectively.

 

NOTE: Current WACC = 10% for Question (A), (B), (C), and (D).

Please explain each questions by the full steps including the formula that are used and variables' value plugged in, and all of inputs for the calculator solutions.

 

 

A) Draw the timelines for both projects: X and Y.

 

B) Calculate the projects' NPVs, IRRs, payback periods.

 

C) If the two projects are independent, which project(s) should be chosen?

 

D) If the two projects are mutually exclusive, which projects should be chosen?

 

E) Plot NPV profiles for the two projects. Identify the projects' IRRs on the graph.

 

F) If the WACC were 5 percent, would this change your recommendation if the projects were mutually exclusive? If the WACC were 15 percent, would this change your recommendation? Explain your answers.

 

G) There is a "crossover rate: of X's and Y's NPV curves, and mark it on the graph with Point O. Explain in words what this rate is and how it affects the choice between mutually exclusive projects.

 

H) If it possible for conflicts to exist between the NPV and the IRR when independent projects are being evaluated? Explain your answer.

Answers

Maurice Tutor
(5)
Status NEW Posted 09 Oct 2017 06:10 PM My Price 9.00

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