Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please solve the question number 12 (subject financial analysis) please use excel where it is required Calculating NPV For the cash flows in the previous

image text in transcribed

please solve the question number 12 (subject financial analysis) please use excel where it is required

Calculating NPV For the cash flows in the previous problem, what is the NPV at a discount rate of zero percent? What if the discount rate is 10 percent? If it is 20 percent? If it is 30 percent? NPV versus IRR Bumble's Bees, Inc., has identified the following two mutually exclusive projects: @0%: NPV = $6,600 @ 10%: NPV = $2,592.04 @ 20%: NPV = -$400.46 @30%: NPV = -$2,700.96 x Year 0 Cash Flow (A) :-$37,000 19,000 14,500 12,000 9,000 Cash Flow (B) -$37,000 6,000 12,500 19,000 23,000 a. What is the IRR for each of these projects? Using the IRR decision rule, which project should the company accept? Is this decision necessarily correct? b. If the required return is 11 percent, what is the NPV for each of these projects? Which project will the company choose if it applies the NPV decision rule? c. Over what range of discount rates would the company choose project A? Project B? At what discount rate would the company be indifferent between these two projects 2 Fynlain a. IRRA = 20.30% IRR = 18.55% b. NPVA = $6,588.52 NPV, = $7,594.13 c. Crossover rate = 14.25%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quantitative Analysis For Management

Authors: Barry Render, Ralph M. Stair, Michael E. Hanna, Trevor S. Hale

14th Edition

0137943601, 9780137943609

More Books

Students also viewed these Finance questions

Question

B Simplify. 2 2 1+ cotx - cosx - cosx cot x

Answered: 1 week ago

Question

5. Prepare for the role of interviewee

Answered: 1 week ago

Question

6. Secure job interviews and manage them with confidence

Answered: 1 week ago