Q1 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, 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 11%. 2 Project A -1,300 800 375 295 305 Projecte -1,300 400 310 445 755 What Is Project A's IRR? Do not round intermediate calculations. Round your answer to two decimal places. What is Project 8'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? 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 exciusive? The reason is Select Reinvestment at the sales vis the superior assumption, so when mutually exclusive projects are evaluated the Select approach should be used for the capital budgeting decision. Q2 The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2021. The company buys equity securities as noncurrent investments. None of Ornamental's investments are large enough to exert significant influence on the investee. Ornamental's fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2020. Mar. 31 Acquired Distribution Transformers Corporation common stock for $510,000. Sep. 1 Acquired $1,065,000 of American Instruments' common stock. Sep. 30 Received a $20,400 dividend on the Distribution Transformers common stock. Oct. 2 Sold the Distribution Transformers common stock for $546,000. Nov. 1 Purchased $1,510,000 of M&D Corporation common stock. Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are: American Instruments common stock M&D Corporation common stock $1,004,000 $1,581,000 Required: 1. Prepare the appropriate journal entry for each transaction or event during 2021, as well as any adjusting entries necessary at year- end. 2. Indicate any amounts that Ornamental Insulation would report in its 2021 income statement, 2021 statement of comprehensive income, and 12/31/2021 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments
