Two mutually exclusive projects have the following features: If the cost of finance to support the project

Question:

Two mutually exclusive projects have the following features:

image text in transcribed

If the cost of finance to support the project is 10 per cent p.a., which of these two projects should the business pursue (assuming no shortage of finance)?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Business Finance

ISBN: 9781292134406

11th Edition

Authors: Eddie McLaney

See More Books

Question Posted: Mar 05, 2024 07:00 AM

See More Questions

Small Research Project 2 etc. Using an airport of your choice, prepare a presentation describing its ground delay program and the effectiveness of such a program implemented at that airport
The case deals with the capital budgeting techniques of Net Present Value (i.e. NPV) and Internal Rate of Return (i.e. IRR). In this case, students will compare two mutually exclusive projects using...
Two mutually exclusive projects have projected cash flows as follows: a. Determine the internal rate of return for each project. b. Determine the net present value for each project at discount rates...
When average total cost is at its minimum: A. Average variable cost is declining with increases in output B. Average variable cost plus average fixed cost is declining with increases in output C....
In addition to the usual CPI, the BLS also calculates a CPI that does not include the prices of food and energy. Because the prices of food and energy tend to fluctuate more than other prices, some...
A heated controversy rages about the possibility of a computer actually thinking. Do you believe that is possible? Do you think a computer can eventually be taught to be truly creative?
Childrens recall of TV ads. Refer to the Journal of Advertising (Spring 2006) study of childrens recall of television commercials, Exercise 9.17 (p. 477). You used a small-sample t test to test the...
For each of the problems listed, determine the following quantities for each activity: the earliest start time, latest start time, earliest finish time, latest finish time, and slack time. List the...
View Policies Show Attempt History Current Attempt in Progress Crede Manufacturing Company uses a standard cost accounting system. In 2020, 28,000 units were produced. Each unit took several...
A company manufactures a single product. Budget and standard cost details for next year include: Selling price per unit ................................$24.00 Variable production cost per unit...
A business is unable or unprepared to invest more than 500,000 in the current year, but has the following projects available to it: Which of these projects should the business invest in? Project A B...
What is the IRR of a project where an initial investment of 120 is followed a year later by a cash inflow of 138 with no further inflows?
What is the difference between the coefficient of determination and the coefficient of correlation? Which of the two measures of goodness of fit do you prefer? Why?lop5
1. A concise introduction of the brand, including but not limited to a brief history, location information, size of the business, product/service offering, and so on.Give brief explanation. 2. Which...
A wood frame structure as shown to the right. The framingconsists of 2x6 studs, a single 2x6 bottom plate, two 2x6 topplates and a 2x10 joist. The studs are spaced at 16 in. on centerand sheathed...
In your reflection journal please list your order - 'most efficient' mediums at the top, 'least efficient' at the bottom. (for eg. social media, display ads, etc)Then, in five hundred words or more,...
Energy prices and global warming are discussed daily in the news as environmental impact of e-waste is just beginning to be recognized. Sustainability and corporate social responsibility need to be...
3. A Channel section is connected to a 10mm gusset plate with 20mm- diameter bolts as shown in the figure. The connecting member is subjected to dead load and live load only. The pitch distance,...
Use Analytic Solver Platform to fit the hurricane data to a discrete distribution? Does the Poisson distribution give the best fit? The number and frequency of Atlantic hurricanes annually from 1940...
Find the market equilibrium point for the following demand and supply functions. Demand: 2p = - q + 56 Supply: 3p - q = 34
Given that the Billingsgate Battery Company could invest its money at a rate of 20 per cent a year, what is the present (immediate) value of the expected first year receipt of 20,000? In other words,...
Given that the Billingsgate Battery Company could invest its money at a rate of 20 per cent a year, what is the present (immediate) value of the expected first year receipt of 20,000? In other words,...
Can you identify the kind of risks that the business may face by buying a machine?
nformation pertaining to Noskey Corporation s sales revenue follows: November 2 0 2 1 ( Actual ) December 2 0 2 1 ( Budgeted ) January 2 0 2 2 ( Budgeted ) Cash sales $ 1 0 5 , 0 0 0 $ 1 1 5 , 0 0 0...
The management team of Netflix maintains a stable dividend using the Lintner model: Dt+1 = Dt + EPS Target Payout Where Dt (Dt+1) = dividend in the current period t (the next period t + 1) EPSt =...
#1 #2 hapter 50 10 D Werences lav Help Required information [The following information applies to the questions displayed below) Archer Company is a wholesaler of custom-built air-conditioning units...

Two mutually exclusive projects have the following features: If the cost of finance to support the project

Question:

Year 0 1 2 NPV @ 10% IRR (approximately) Cash flows Project A (10,000) 6,000 6,000 413 13% Project B (6,000) 3,650 3,650 334 14%

Step by Step Answer:

There is obviously a conflict here Both NPV and IRR are based on discounting cash flows Both Projects A and B have IRRs in excess of 10 percent yet th...View the full answer

Business Finance

Students also viewed these Business questions