Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 %

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

The World Is Your Oyster The Guide To Finding Great Investments Around The Globe

Authors: Jeff D. Opdyke

1st Edition

0307381048, 978-0307381040

More Books

Students also viewed these Finance questions