Below is a graph of the NPVS of Projects L and S at different discount rates.Which of the statements below is incorrect?NPV 60($)504030322010Crossover Point = 8.7%S0510152020-10IRRL = 18.1%IRRS = 23.6%Discount Rate (%)23.6If the discount rate is less than 8.7%, Project L will have a lower NPV than ProjectS.O Project L will have a negative NPV if the discount rate is higher than 18.1%.If the projects are independent and the discount rate is 15%, both projects wouldbe acceptable.If the discount rate is 24%, the company should NOT undertake Project S.At the crossover point, both projects will have the same NPV.

The incorrect statement is: "If the discount rate is 24%, the company should NOT undertake Project…

Answered: Below is a graph of the NPVS of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The NPV of a project is negative when the discount rate at 8%, but is positive when the discount rate is at 6%, which of the following choices could be the IRR for the project? Select one: a.8% b.9% C.5% d.7%
28) ABC Corporation is concerned that the following project has some problem with IRR. Year 0 1 2 4 5 -150-120 CF_Project 700 -100-90 How many discount rates produce a zero NPV for this project? A) One, a discount rate of 0% B) One, a discount rate of 36% C) One, a discount rate of 69% D) Two, discount rates of 0% and 36% E) Two, discount rates of 0% and 69% F) Two, discount rates of 36% and 69% G) None H) None of the above 29) ABC Corporation is considering an investment of $400 million with expected after-tax cash inflows of $102 million per year for seven years. The required rate of return is 10%. However, there is a possibility that the project will not get the required level of investments and ABC Corporation will have no other choice but to proceed with available funding (90% of the required investments). In this case, the after-tax cash inflows of $91,8 million per year are expected for seven years. As a result, on the NPV profile of a project: A) the vertical intercept shifts…
Wilson is concerned that this project has multiple its year 1, 2 flows -50 100 0 -50 how many discount rates produce a zero NPV for the project? a. two, discount rates of 0% and 62% b.one, discount rate of 0 percent c. two, discount rates of 0% and 32%
7. IRR (S5.3) Calculate the IRR (or IRRS) for the following project: Co C₁ +3,500 -3,000 For what range of discount rates does the project have a positive NPV? +4,000 C3 -4,000
Which of the following statements is correct? A. If the NPV of a project is greater than 0, its PI will equal 0. B. If the IRR of a project is 0%, its NPV, using a discount rate, k, greater than 0, will be 0. C. If the PI of a project is less than 1, its NPV should be less than 0. D. None
Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign. Discount Rate NPV Project A NPV Project B 0% $ $ 5 $ $ 10 $ $ 12 $ $ 15 $ $ 18.1 $ $ 23.01 $ $ The exel sheet is down below for the entirre question! Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations. % What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A: % Project Acceptance: WACC 13.00% Accept #N/A WACC 18.00% NPVA $2.66 NPVB $53.19 Accept #N/A NPV Profiles:…
Following projects, A and B are mutually exclusive. Use a discount rate of 7.6 percent to solve the following. Year 1 2. 3 4 5. Project A -11000 4000 3000 4000 4000 2000 Project B -15000 5000 4000 5000 7000 3000 Calculate the NPV and IRR, and select the project.
Ch 11: Assignment - The Basics of Capital Budgeting Part II PTODIEM Vwalk-Tirougn A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 1 3 4 6. 7 Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180 Project B -$405 $131 $131 $131 $131 $131 $131 $0 a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % d. From your answers to parts a-c, which project would be selected? -Select-
2) First, calculate the payback period and NPV for all projects below. For all the projects, the relevant discount rate is 10%. Then, comment on why the payback period provides misleading information about the following: a. Project A b. Project B versus Project C c. Project D versus Project E d. Project D versus Project F Year A B C D E F 0 -1.000 -1.000 -1.000 -1.000 -1.000 -1.000 1 1,000 100 400 500 400 500 2 200 300 500 400 500 3 300 200 500 400 10.000 4 400 100 400 5 500 500 400
Project Analysis. Assume that you are evaluating the following three mutually exclusive projects: A. Complete the following analyses. (For the last two lines, Terminal Value, please write in the dollar amount of the terminal value.) B. Compare and explain the conflicting rankings of the NPVs and TRRs versus the IRRs. C. Using different discount rates, is it possible to get different rankings within the NPV calculation? Why or why not? D. If 10 percent is the required return, which project is preferred? E. Which is the fairer representation of these two projects, TRR or IRR? Why?
A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 1 2 4 6 7 Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180 Project B -$405 $134 $134 $134 $134 $134 $134 $0 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ Project B: $ b. What is each project's IRR? Round your answer to two decimal places. Project A: % Project B: % c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Do not round your intermediate calculations. Project A: % Project B: d. From your answers to parts a-c, which project would be selected?
Choices for last three requirements 3. What is the approximate IRR of Project A? a. 28% b. 18% c. 24% d. 21% 4. What is the approximate IRR of Project B? a. 17% b. 14% c. 20% d. 22% 5. if the crossover rate is exactly 9.31% which of the following discount rate would have a conflict in the decision making (between NPV and IRR) assuming the projects are mutually exclusive? a. 7% b. 11%

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