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Please check if 17 18 is correct if 16 answer is E Answer the following questions. A company is analyzing two mutually exclusive projects, S
Please check if 17 18 is correct if 16 answer is E
Answer the following questions. A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below: Year 0 -200 -200 Year 1 150 Year 2 100 Cashflow for S Cashflow for L Year 3 10 100 Year 4 10 250 10 10 Assume the company can get an unlimited amount of capital at that cost. WACC NPV (S) NPV (L) 5% 10% 15% 20% 25% What is the internal rate of return (IRR) for Project S? Project L? If the company's cost of capital is 5% which project will you choose based on IRR? Select one: a. 22.07%, 18.91%, S O b. 10.00%, 22.55%, L O c. 22.07%, 17.54%, L d. 19.93%, 15.67%, L e. 20.12%, 18.91%, S Continued from previous question. If the company's cost of capital is 10%, what is the net present value of each Project? What's the profit foregone if IRR method is used? Select one: a. NPVS = $78.81, NPVL = $60.24, $35.51 . O b. NPVS = $33.35, NPVL = $63.24, $29.89 O c. NPVS = $100.81, NPVL = $112.45, $11.25 O d. NPVS = $82.26, NPVL = $75.63, $3.97 e. NPVS = $63.24, NPVL = $33.35, $-29.89 Continued from previous question. Which of the following statements is correct? Select one: a. If the WACC is larger than the crossover rate, a conflict arises between the NPV and the IRR methods. b. The crossover rate should be between 15 and 20%. c. If the WACC is smaller than the crossover rate, you will choose project S using the NPV method. d. The crossover rate should be smaller than 10%. e. The crossover rate should be between 20% and 25%Step by Step Solution
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