Question
Swenson's is considering two mutually exclusive projects, Projects A and B, and has determined that the crossover rate for these projects is 11.7%. Given this
Swenson's is considering two mutually exclusive projects, Projects A and B, and has determined that the crossover rate for these projects is 11.7%. Given this you know that:
a. | The project that is preferred at a discount rate of 11% will be the opposite project of that preferred at a discount rate of 12%. | |
b. | Both projects have a negative NPV at discounts rates greater than 11.7%. | |
c. | Both projects have a zero NPV at a discount rate of 11.7%. | |
d. | Neither project will be accepted if the discount rate is less than 11.7%. |
You are considering two mutually exclusive projects. Project A has cash flows of -$87,000, $32,600, $35,900, and $43,400 for years 0 to 3, respectively. Project B has cash flows of -$85,000, $14,700, $21,200, and $89,800 for years 0 to 3, respectively. Project A has a required return of 9 percent while Project B s required return is 11 percent. Which project(s), if either, should you accept based on net present value?
a. | Accept Project A and reject Project B | |
b. | Reject both projects | |
c. | Accept both projects | |
d. | Reject Project A and accept Project B |
You are considering two mutually exclusive projects. Project A has cash flows of -$74,900, $18,400, $26,300, and $57,100 for years 0 to 3, respectively. Project B has cash flows of -$79,000, $18,400, $22,700, and $51,500 for years 0 to 3, respectively. Both projects have a required return of 12.75 percent. Should you accept or reject these projects based on the profitability index?
a. | Accept Project A and reject Project B. | |
b. | Reject Project A and accept Project B. | |
c. | Accept both projects. | |
d. | Reject both projects. |
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