The world’s Largest Sharp Brain Virtual Experts Marketplace Just a click Away
Levels Tought:
Elementary,Middle School,High School,College,University,PHD
| Teaching Since: | May 2017 |
| Last Sign in: | 399 Weeks Ago |
| Questions Answered: | 66690 |
| Tutorials Posted: | 66688 |
MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
![]()
![]()
![]()
![]()
ST-2
CAPITAL BUDGETING CRITERIA You must analyze two projects, X and Y. Each project costs $10,000, and the firm’s WACC is 12%. The expected net cash flows are as follows:
Â
Â
|
 |
0 |
1 |
2 |
3 |
4 |
|
Project X |
-$10,000 |
$6,500 |
$3,000 |
$3,000 |
$1,000 |
|
Project Y |
-$10,000 |
$3,500 |
$3,500 |
$3,500 |
$3,500 |
Â
a.       Calculate each project’s NPV, IRR, MIRR, payback, and discounted payback.
b.      Which project(s) should be accepted if they are independent?
c.       Which project(s) should be accepted if they are mutually exclusive?
d.      How might a change in the WACC produce a conflict between the NPV and IRR rankings of the two projects? Would there be a conflict if WACC were 5%? (Hint: Plot the NPV profiles. The crossover rate is 6.21875%.)
e.       Why does the conflict exist?
Â
Â
Â
Â
Â
Â
Hel-----------lo -----------Sir-----------/Ma-----------dam-----------Tha-----------nk -----------You----------- fo-----------r u-----------sin-----------g o-----------ur -----------web-----------sit-----------e a-----------nd -----------acq-----------uis-----------iti-----------on -----------of -----------my -----------sol-----------uti-----------on.-----------Ple-----------ase----------- pi-----------ng -----------me -----------on -----------cha-----------t I----------- am----------- on-----------lin-----------e o-----------r i-----------nbo-----------x m-----------e a----------- me-----------ssa-----------ge -----------I w-----------ill----------- be----------- ca-----------tch-----------