Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1. Answer in Excel. NPV versus IRR: Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both Projects require an annual return of 14 percent.
Year____Deep water Fishing____New Submarine Ride
0_______-$950,000___________-$1,850,000
1________ 370,000______________900,000
2_______ _510,000______________ 800,000
3________ 420,000______________750,000
a. If your decision rule is to accept the project with the greater IRR, which project should you choose?
b. Because you are fully aware of the IRR rule's scale problem, you find out the incremental IRR for the cash flows. Based on your computation, which project should you choose?
c. To be prudent, you compute the NPV for both projects. Which project should your choose? Is it consistent with the incremental IRR rule?

2. Capital budgeting with Inflation: Consider the following cash flows on two mutually exclusive projects:
Year_______Project A________Project B
0_________-$50,000_________-$65,000
1___________30,000__________29,000
2___________25,000__________38,000
3___________20,000__________41,000
The cash flows of project A are expressed in real terms, whereas those of project B are expressed in nominal terms. The appropriate nominal discount rate is 13 percent and the inflation rate is 4 percent.
a. Which project should you choose?

3. Calculating Break-even: In each of the following cases, find the unknown variable. Ignore taxes.
Accounting_____________Unit Vvariable____
Bread-even___Unit Price____Cost___________Fixed Costs____Depreciation
95,300_________$41_______$30____________$ 820,000________?______
143,806___________?_______56_____________ 2,750,000___$1,150,000
__7,835__________97________?_______________160,000_____ 150,000

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M925009

Have any Question? 


Related Questions in Basic Finance

For this question i had been using spirit airlines 2015 10k

For this question I had been using Spirit AIrlines 2015 10k report on module 1. However, I'm a bit lost as to how to read it in terms of bonds. Can someone explain this to me?  http://ir.spirit.com/financials.cfm  Using ...

If the initial margin for one contract of crude oil was

If the initial margin for one contract of crude oil was $1,000 and the maintenance level was $800, how far would prices need to move against the position in order to trigger a margin call? (Assume only $1,000 on deposit. ...

1 for each of the following patterns of databull what is

1. For each of the following patterns of data, • What is the probability of the researcher having made a Type 1 error? • What is the probability of the researcher having made a Type 2 error? • Should the null hypothesis ...

1 when did gnma come into existence what was its original

1. When did GNMA come into existence? What was its original function? What is its main function now? 2. What is a mortgage-related security? What are the similarities and differences between mortgage securities and corpo ...

You are a freshman in college and are planning a trip to

You are a freshman in college and are planning a trip to Europe when you graduate from college at the end of four years. You plan to save the following amounts annually, starting today: $716, $602, $732, and $736. If the ...

Problems -1 triangular arbitragesuppose you observe the

Problems - 1. Triangular Arbitrage Suppose you observe the following posted exchange rates on the Japanese yen (¥) and South African ran (R) against the US dollar: JPY - ¥97.3702/$ ZAR - R10.1453/$ The posted cross rate ...

1 discuss the advantages and disadvantages of single-case

1. Discuss the advantages and disadvantages of single-case experimental designs, relative to group designs. 2. What is a case study? Are case studies an example of descriptive, correlational, experimental, or quasi-exper ...

One of the uk divisions of global enterprises plc wishes to

One of the UK divisions of Global Enterprises plc wishes to set up a new manufacturing plant in Indonesia, because this would give it an important foothold in one of the fast growing parts of the world market, and would ...

A company you are researching has common stock with a beta

A company you are researching has common stock with a beta of 1.20. Currently, Treasury bills yield 4%, and the market portfolio offers an expected return of 13%. The company finances 20% of its assets with debt that has ...

The scientific method can be described as a circle or a

The scientific method can be described as a circle or a spiral of steps that leads from an initial observation, to a hypothesis, to new observations, to a new hypothesis. For each of the following observations: a. State ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen