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Consider the following projects, X and Y where the firm can only choose one. Project X costs $ 1 3 0 0 and has cash
Consider the following projects, X and Y where the firm can only choose one. Project X costs $ and has cash flows of $ $ $ $ $ in each of the next years. Project Y also costs $ and generates cash flows of $ $ $ $ for the next years, respectively. WACC A Draw the timelines for both projects: X and Y B Calculate the projects NPVs IRRs, payback periods. C If the two projects are independent, which projects should be chosen? D If the two projects are mutually exclusive, which projects should be chosen? E Plot NPV profiles for the two projects. Identify the projects IRRs on the graph. F If the WACC were percent, would this change your recommendation if the projects were mutually exclusive? If the WACC were percent, would this change your recommendation? Explain your answers. G There is a crossover rate of Xs and Ys NPV curves, and mark it on the graph with Point O Explain in words what this rate is and how it affects the choice between mutually exclusive projects. H If it possible for conflicts to exist between the NPV and the IRR when independent projects are being evaluated? Explain your answer.Consider the following projects, and where the firm can only choose one. Project costs $ and has cash flows of $$$$$ in each of the next years. Project also costs $ and generates cash flows of $$$$ for the next years, respectively. WACC A Draw the timelines for both projects: and B Calculate the projects' NPVs IRRs, payback periods. C If the two projects are independent, which projects should be chosen? D If the two projects are mutually exclusive, which projects should be chosen? E Plot NPV profiles for the two projects. Identify the projects' IRRs on the graph. F If the WACC were percent, would this change your recommendation if the projects were mutually exclusive? If the WACC were percent, would this change your recommendation? Explain your answers. G There is a "crossover rate" of Xs and Ys NPV curves, and mark it on the graph with Point O Explain in words what this rate is and how it affects the choice between mutually exclusive projects. H If it possible for conflicts to exist between the NPV and the IRR when independent projects are being evaluated? Explain your answer.
Consider the following projects, X and Y where the firm can only choose one. Project X costs $ and has cash flows of $ $ $ $ $ in each of the next years. Project Y also costs $ and generates cash flows of $ $ $ $ for the next years, respectively. WACC
A Draw the timelines for both projects: X and Y
B Calculate the projects NPVs IRRs, payback periods.
C If the two projects are independent, which projects should be chosen?
D If the two projects are mutually exclusive, which projects should be chosen?
E Plot NPV profiles for the two projects. Identify the projects IRRs on the graph.
F If the WACC were percent, would this change your recommendation if the projects were
mutually exclusive? If the WACC were percent, would this change your recommendation? Explain your answers.
G There is a crossover rate of Xs and Ys NPV curves, and mark it on the graph with Point O Explain in words what this rate is and how it affects the choice between mutually exclusive projects.
H If it possible for conflicts to exist between the NPV and the IRR when independent projects are being evaluated? Explain your answer.Consider the following projects, and where the firm can only choose one. Project costs
$ and has cash flows of $$$$$ in each of the next years. Project
also costs $ and generates cash flows of $$$$ for the next years,
respectively. WACC
A Draw the timelines for both projects: and
B Calculate the projects' NPVs IRRs, payback periods.
C If the two projects are independent, which projects should be chosen?
D If the two projects are mutually exclusive, which projects should be chosen?
E Plot NPV profiles for the two projects. Identify the projects' IRRs on the graph.
F If the WACC were percent, would this change your recommendation if the projects were
mutually exclusive? If the WACC were percent, would this change your
recommendation? Explain your answers.
G There is a "crossover rate" of Xs and Ys NPV curves, and mark it on the graph with Point
O Explain in words what this rate is and how it affects the choice between mutually
exclusive projects.
H If it possible for conflicts to exist between the NPV and the IRR when independent projects
are being evaluated? Explain your answer.
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