Question
Best Co. is evaluating the following mutually exclusive projects for investment (numbers are in $ millions). Period Proj. A Proj. B Proj. C 0 -10
Best Co. is evaluating the following mutually exclusive projects for investment (numbers are in $ millions).
| Period | Proj. A | Proj. B | Proj. C |
| 0 | -10 | -15 | -20 |
| 1 | 3 | 3 | 4 |
| 2 | 3 | 4 | 5 |
| 3 | 3 | 5 | 6 |
| 4 | 3 | 6 | 7 |
| 5 | 3 | 7 | 8 |
What is the cross over rate between Proj. A and Proj. C? (Hint: this is the discount rate at which the NPV of A equals the NPV of C).
Group of answer choices
rate 12.0%
12.0% < rate 14.0%
14.0% < rate 16.0%
16.0% < rate
Best Co. is evaluating the following mutually exclusive projects for investment (numbers are in $ millions).
| Period | Proj. A | Proj. B | Proj. C |
| 0 | -10 | -15 | -20 |
| 1 | 3 | 3 | 4 |
| 2 | 3 | 4 | 5 |
| 3 | 3 | 5 | 6 |
| 4 | 3 | 6 | 7 |
| 5 | 3 | 7 | 8 |
What is the internal rate of return (IRR) of Proj. B?
Group of answer choices
IRR 12.0%
12.0% < IRR 14.0%
14.0% < IRR 16.0%
16.0% < IRR
Best Co. is evaluating the following mutually exclusive projects for investment (numbers are in $ millions).
| Period | Proj. A | Proj. B | Proj. C |
| 0 | -10 | -15 | -20 |
| 1 | 3 | 3 | 4 |
| 2 | 3 | 4 | 5 |
| 3 | 3 | 5 | 6 |
| 4 | 3 | 6 | 7 |
| 5 | 3 | 7 | 8 |
If the appropriate discount rate is 15% (after tax), what is the net present value (NPV) of Proj. C (in $ millions)?
Group of answer choices
0 < NPV
0 < NPV 0.05
0.05 < NPV 0.10
0.10 < NPV
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