Question
PART A: What is Project As IRR? Do not round intermediate calculations. Round your answer to two decimal places. _____% PART B: What is Project
PART A: What is Project As IRR? Do not round intermediate calculations. Round your answer to two decimal places. _____%
PART B: What is Project B's IRR? Do not round intermediate calculations. Round your answer to two decimal places. _____%
PART C:If the projects were independent, which project(s) would be accepted according to the IRR method? answer options: BOTH PROJECTS / PROJECT A / PROJECT B / NEITHER PROJECT
PART D: If the projects were mutually exclusive, which project(s) would be accepted according to the IRR method?
answer options: BOTH PROJECTS / PROJECT A / PROJECT B / NEITHER PROJECT
PART E: Could there be a conflict with project acceptance between the NPV and IRR approaches when projects are mutually exclusive?
answer options: YES / NO
PART F: The reason is ____
answer options: the NPV and IRR approaches use the same reinvestment rate assumption and so both approaches reach the same project acceptance when mutually exclusive projects are considered / the NPV and IRR approaches use different reinvestment rate assumptions and so there can be a conflict in project acceptance when mutually exclusive projects are considered.
PART G: Reinvestment at the ____is the superior assumption, so when mutually exclusive projects are evaluated the -Select-NPVIRRCorrect 6 of Item 3 approach should be used for the capital budgeting decision.
answer options: IRR / WACC
***PLEASE ANSWER ALL PARTS OF QUESTION, NO HANDWRITING, I WILL UPVOTE IF CORRECT, THANK YOU
Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 12%. 0 1 2 4 350 300 Project A Project B -1,110 -1,110 790 390 250 400 285 750 What is Project A's IRR? Do not round intermediate calculations. Round your answer to two decimal places. % What is Project B's IRR? Do not round intermediate calculations. Round your answer to two decimal places. % If the projects were independent, which project(s) would be accepted according to the IRR method? -Select- If the projects were mutually exclusive, which project(s) would be accepted according to the IRR method? -Select- Could there be a conflict with project acceptance between the NPV and IRR approaches when projects are mutually exclusive? -Select- The reason is -Select- Reinvestment at the -Select- is the superior assumption, so when mutually exclusive projects are evaluated the -Select- v approach should be used for the capital budgeting decisionStep by Step Solution
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