Question
Bruin, Incorporated has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 41,300 $ 41,300 1 19,100 6,300
Bruin, Incorporated has identified the following two mutually exclusive projects:
Year | Cash Flow (A) | Cash Flow (B) |
---|---|---|
0 | $ 41,300 | $ 41,300 |
1 | 19,100 | 6,300 |
2 | 17,800 | 14,200 |
3 | 15,200 | 17,900 |
4 | 8,400 | 30,300 |
a-1. What is the IRR for each of these projects?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
a-2. If you apply the IRR decision rule, which project should the company accept?
b-1. Assume the required return is 11 percent. What is the NPV for each of these projects?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b-2. Which project will you choose if you apply the NPV decision rule?
Bruin, Incorporated has identified the following two mutually exclusive projects:
Year | Cash Flow (A) | Cash Flow (B) |
---|---|---|
0 | $ 41,300 | $ 41,300 |
1 | 19,100 | 6,300 |
2 | 17,800 | 14,200 |
3 | 15,200 | 17,900 |
4 | 8,400 | 30,300 |
a-1. What is the IRR for each of these projects?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
a-2. If you apply the IRR decision rule, which project should the company accept?
b-1. Assume the required return is 11 percent. What is the NPV for each of these projects?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b-2. Which project will you choose if you apply the NPV decision rule?
c-1. Over what range of discount rates would you choose Project A?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
c-2. Over what range of discount rates would you choose Project B?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
c-3. At what discount rate would you be indifferent between these two projects?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
NEED HELP ANSWERING PART C!!
\begin{tabular}{|l|l|l|l|l|l|} \hline c-1. & Project A & Above & an interest rate of & & % \\ \hline c-2. & Project B & Below & an interest rate of & & % \\ \hline c-3. & Indifferent interest rate & & % & & \\ \hline \end{tabular}
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started