Romboski, LLC, has identified the following two mutually exclusive projects:Year Cash Flow (A) Cash Flow (B)0 58,000 58,000 1 34,000 21,200 2 28,000 25,200 3 20,000 30,000 4 13,600 25,200Requirement1:a) What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answer as a percentage roundedto 2 decimal places (e.g., 32.16).)(b) If you apply the IRR decision rule, which project should the company accept?Requirement 2:(a) Assume the required return is 14 percent. What is the NPV for each of these projects? (Do not round intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16).)(b) Which project will you choose if you apply the NPV decision rule?Requirement 3:(a) Over what range of discount rates would you choose Project A? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)(b) Over what range of discount rates would you choose Project B? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)(c) At what discount rate would you be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Question

28-11-2020
Business

contestada

Romboski, LLC, has identified the following two mutually exclusive projects:Year Cash Flow (A) Cash Flow (B)0 58,000 58,000 1 34,000 21,200 2 28,000 25,200 3 20,000 30,000 4 13,600 25,200Requirement1:a) What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answer as a percentage roundedto 2 decimal places (e.g., 32.16).)(b) If you apply the IRR decision rule, which project should the company accept?Requirement 2:(a) Assume the required return is 14 percent. What is the NPV for each of these projects? (Do not round intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16).)(b) Which project will you choose if you apply the NPV decision rule?Requirement 3:(a) Over what range of discount rates would you choose Project A? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)(b) Over what range of discount rates would you choose Project B? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)(c) At what discount rate would you be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Respuesta :

Otras preguntas

Bats have oversize ears, which help the bats use sound waves to detect the motion of their prey. Which example of the characteristics of life is most similar? A

In which of the following relationships is an agency conflict problem LEAST likely to arise? A. the relationship between a driver and the passengers in a car

1. Convert the following.A. What is 500.2 mm in meters?B. What is 6500 g in kilograms?C. What is 35000 ks in megaseconds?D. What is 21 in in meters? 1 in = 2.54

IM GIVING BRAINLIEST TO WHOEVER ANSWERS CORRECT FIRST!!!! AND 30 POINTS!!! Your water three sunflower plants with salt water. Each plant receives a different co

The primary operating goal of a publicly-owned firm trying to best serve its stockholders should be to A. Maximize managers' own interests, which are by defini

All of the following are true of corruption except which? Multiple Choice It is usually used for corporate gain. Corruption is unethical behavior. Kickback are

The early alchemists used to do an experiment in which water was boiled for several days in a sealed glass container. Eventually, some solid residue would appea

Nonpolar molecules are the result of unequal electron pair sharing. True or False

A radar station detects an airplane approaching directly from the east. At first observation, the range to the plane is 375.0 m at 43.0 ° above the horizon. The

An atom has four electrons in its valence shell. What types of covalent bonds is it capable of forming?

ACCESS MORE

jepessoa jepessoa · Answer 1 · 2020-12-02T02:34:38+01:00

Answer:

Year Cash Flow (A) Cash Flow (B)

0 -58,000 -58,000

1 34,000 21,200

2 28,000 25,200

3 20,000 30,000

4 13,600 25,200

Requirement 1:

a) What is the IRR for each of these projects?

using an excel spreadsheet and the IRR function:

Project A's IRR = 28.3%

Project B's IRR = 25.7%

(b) If you apply the IRR decision rule, which project should the company accept?

Project A (its IRR is higher)

Requirement 2:

(a) Assume the required return is 14 percent. What is the NPV for each of these projects?

using an excel spreadsheet and the NPV function:

Project A's NPV = $14,921.37

Project B's NPV = $15,156.64

(b) Which project will you choose if you apply the NPV decision rule?

Project B (its NPV is higher)

Requirement 3:

(a) Over what range of discount rates would you choose Project A?

higher than 14.85%

(b) Over what range of discount rates would you choose Project B?

lower than 14.85%

(c) At what discount rate would you be indifferent between these two projects?

crossover rate calculation

Year Cash Flow (A) Cash Flow (B) differential amount

0 -58,000 -58,000 $0

1 34,000 21,200 $12,800

2 28,000 25,200 $2,800

3 20,000 30,000 -$10,000

4 13,600 25,200 -$11,600

using an excel spreadsheet and IRR function, the cross over rate = 14.85%