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1. For the calculations of a, b, c, e, f, g, h from the data below, show all your works, and then choose which project
1. For the calculations of a, b, c, e, f, g, h from the data below, show all your works, and then choose which project or franchises of L and S is better?
2. For d, under the assumption that both projects are mutually exclusive, explain the case of conflict or no conflict.
(Data)
Cash Flows for Franchises L and S.
(Discount rate r or WACC is 10%)
Ls CFs
Ss CFs
1 year
-105
-105
2 year
10
70
3 year
60
50
4 year
80
20
a. NPVL and NPVS
b. IRRL and IRRS
c. MIRRL and MIRRS
d. Crossover rate or Crossover point
e. PIL and PIS
f. PaybackL and PaybackS
g. Discounted PaybackL and Discounted PaybackS
h. EAAL and EAAS
3. From the data below, identify both the economic life and physical life and then decide whether the project can accept or not. If the project can accept, explain why you can accept the project. How many years will you operate for the maximum wealth?
Project (Cost of capital: 10%)
CFs
Salvage Value
1 year
-200
200
2 year
100
100
3 year
80
50
4 year
80
0
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