1. Garage, Inc., has identified the following two mutually exclusive projects:
| Year |
Cash Flow (A) |
|
Cash Flow (B) |
| 0 |
-$ |
29,400 |
|
|
-$ |
29,400 |
|
| 1 |
|
14,800 |
|
|
|
4,500 |
|
| 2 |
|
12,700 |
|
|
|
10,000 |
|
| 3 |
|
9,400 |
|
|
|
15,600 |
|
| 4 |
|
5,300 |
|
|
|
17,200 |
a-1 What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
IRR
Project A %
Project B %
a-2 Using the IRR decision rule, which project should the company accept?
Project A
Project B
a-3 Is this decision necessarily correct?
Yes
No
b-1 If the required return is 12 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.)
NPV
Project A $
Project B $
b-2 Which project will the company choose if it applies the NPV decision rule?
Project A
Project B
c. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Discount rate %
2.The Sloan Corporation is trying to choose between the following two mutually exclusive design projects.
| Year |
Cash Flow
(I) |
|
Cash Flow
(II) |
| 0 |
-$ |
63,000 |
|
|
-$ |
18,100 |
|
| 1 |
|
32,000 |
|
|
|
9,750 |
|
| 2 |
|
32,000 |
|
|
|
9,750 |
|
| 3 |
|
32,000 |
|
|
|
9,750 |
a-1 If the required return is 11 percent, what is the profitability index for both projects? (Do not round intermediate calculations. Round your answers to 3 decimal places, e.g., 32.161.)
Profitability
Index
Project I
Project II
a-2 If the company applies the profitability index decision rule, which project should the firm accept?
Project I
Project Il
b-1 What is the NPV for both projects? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
NPV
Project I $
Project II $
b-2 If the company applies the NPV decision rule, which project should it take?
Project I
Project II
3. Consider the following two mutually exclusive projects:
| Year |
Cash Flow
(A) |
|
Cash Flow
(B) |
| 0 |
-$ |
342,000 |
|
-$ |
50,500 |
|
| 1 |
|
53,000 |
|
|
24,800 |
|
| 2 |
|
73,000 |
|
|
22,800 |
|
| 3 |
|
73,000 |
|
|
20,300 |
|
| 4 |
|
448,000 |
|
|
15,400 |
Whichever project you choose, if any, you require a 14 percent return on your investment.
a-1 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Payback period
Project A years
Project B years
a-2 If you apply the payback criterion, which investment will you choose?
Project A
Project B
b-1 What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Discounted payback period
Project A years
Project B years
b-2 If you apply the discounted payback criterion, which investment will you choose?
Project A
Project B
c-1 What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
NPV
Project A $
Project B $
c-2 If you apply the NPV criterion, which investment will you choose?
Project A
Project B
d-1 What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
IRR
Project A %
Project B %
d-2 If you apply the IRR criterion, which investment will you choose?
Project A
Project B
e-1 What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)
Profitability index
Project A
Project B
e-2 If you apply the profitability index criterion, which investment will you choose?
Project A
Project B
f. Based on your answers in (a) through (e), which project will you finally choose?
(Click to select)Project AProject B
please answer all parts of all questions, thank you much appreciated