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Category > Business & Finance Posted 05 Jun 2017 My Price 7.00

Calculation of Net Present Values,

Calculation of Net Present Values, Internal Rate of Returns and Cross Over rates to select among mutually exclusive projects based on cash flows and discounting rate/s Derek’s Donuts is considering two mutually exclusive investments. The projects’ expected net cash flows are as follows: Expected Net Cash Flows Year Project A Project B 0 $(300) $(405) 1 (387) 134 2 (193) 134 3 (100) 134 4 500 134 5 500 134 6 850 134 7 100 0 a. Construct NPV profiles for Projects A and B. b. What is each project’s IRR? c. If you were told that cash project’s required rate of return was 12 percent, which project should be selected? If the required rate of return was 15 percent, what would be the proper choice? d. Looking at the NPV profiles constructed in part (a), what is the approximate crossover rate, and what is its significance?

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Status NEW Posted 05 Jun 2017 09:06 AM My Price 7.00

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