Question
Zayas, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 54,000 $ 54,000 1 30,000 17,600
Zayas, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 54,000 $ 54,000 1 30,000 17,600 2 24,000 21,600 3 18,000 26,000 4 12,800 25,600 a. What is the IRR for each of these projects? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return Project A % Project B % If you apply the IRR decision rule, which project should the company accept? (Click to select)Project AProject B b. Assume the required return is 14 percent. What is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Net present value Project A $ Project B $ Which project will you choose if you apply the NPV decision rule? (Click to select)Project AProject B c. Over what range of discount rates would you choose Project A? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Project A (Click to select)AboveBelow % Over what range of discount rates would you choose Project B? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Project B (Click to select)BelowAbove % At what discount rate would you be indifferent between these two projects? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Discount rate %
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