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Need help a through c Basic scenario analysis Prime Paints is in the process of evaluating two mutually exclusive additions to its processing capacity. The
Need help a through c
Basic scenario analysis Prime Paints is in the process of evaluating two mutually exclusive additions to its processing capacity. The firm's financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows associated with each project. These estimates are shown in the following table. Project A Project B Initial investment (CF) $12,800 $12,800 Outcome Annual cash inflows (CF) Pessimistic $820 $1,550 Most likely 1,600 1,600 Optimistic 1.730 N a. Determine the range of annual cash inflows for each of the two projects. b. Assume that the firm's cost of capital is 10.9% and that both projects have 20 year lives. Construct a table showing the NPVs for each project for each of the possible outcomes. Include the range of NPVs each project c. Do parts (a) and (b) provide consistent views of the two projects? Explain. a. The range of annual cash inflows for project A is $ 1650. (Round to the nearest dollar.) 2.470 The range of annual cash inflows for project B is $ 180. (Round to the nearest dollar.) b. Assume that the firm's cost of capital is 10.9% and that both projects have 20 year lives. Complete the NPV table below for project A: (Round to the nearest cent.) NPVs Outcome Project A Pessimistic Most likely Optimistic Range s Enter any number in the edit fields and then click CheckStep by Step Solution
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