Question
Question 1: Intro You've estimated the following cash flows (in $) for two projects: Year Project A Project B 0 -5,100 -7,650 1 1,325 1,325
Question 1:
Intro
You've estimated the following cash flows (in $) for two projects:
| Year | Project A | Project B |
|---|---|---|
| 0 | -5,100 | -7,650 |
| 1 | 1,325 | 1,325 |
| 2 | 2,148 | 2,148 |
| 3 | 3,400 | 7,040 |
*The required return for both projects is 8%.
Part1
What is the NPV for project A?
Part2
What is the NPV for project B?
Part3
Which project seems better according to the NPV method?
- Project A or Project B
Question 2:
Intro
Your firm is subject to capital rationing and can only invest $60,000. You've estimated the following cash flows (in $) for two projects:
| Year | Project A | Project B |
|---|---|---|
| 0 | -57,000 | -57,000 |
| 1 | 10,000 | 30,000 |
| 2 | 20,000 | 20,000 |
| 3 | 30,000 | 10,000 |
| 4 | 40,000 | 0 |
*The required return for both projects is 8%.
Part1
What is the payback period for project A?
Part2
What is the payback period for project B?
Part3
Which project seems better according to the payback method?
- Project A or Project B
Part4
What is the NPV for project A?
Part5
What is the NPV for project B?
Part6
Which project seems better according to the NPV method?
- Project A or Project B
Part7
Compare the answers to parts 3 and 6. If both projects are mutually exclusive, which one should you accept?
- Project A or Project B
Question 3
Intro
You've estimated the following cash flows (in $) for two mutually exclusive projects:
| Year | Project A | Project B |
|---|---|---|
| 0 | -5,600 | -8,400 |
| 1 | 1,325 | 1,325 |
| 2 | 2,148 | 2,148 |
| 3 | 4,159 | 8,028 |
*The required return for both projects is 8%.
Part1
What is the IRR for project A?
Part2
What is the IRR for project B?
Part3
Which project seems better according to the IRR method?
- Project A or Project B
Part4
What is the NPV for project A?
Part5
What is the NPV for project B?
Part6
Which project seems better according to the NPV method?
- Project A or Project B
Part7
Compare the answers to parts 3 and 6. If both projects are mutually exclusive, which one should you accept?
- Project A or Project B
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Leading Strategic Change In An Era Of Healthcare Transformation
Authors: Jim Austin ,Judith Bentkover ,Laurence Chait
1st Edition
3319808826, 978-3319808826
