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

Briefly describe each of the following funds transfer

Briefly describe each of the following funds transfer mechanisms: a. Depository transfer check (DTC) b. Automated clearinghouse (ACH) debit transfer c. Wire transfer Why are wire transfers typically used only for high-do ...

The stock of bruin inc has an expected return of 22 percent

The stock of Bruin, Inc., has an expected return of 22 percent and a standard deviation of 35 percent. The stock of Wildcat Co. has an expected return of 14 percent and a standard deviation of 40 percent. The correlation ...

If the calculated value of f is found to be significant for

If the calculated value of F is found to be significant for the main effect of an independent variable with more than two levels, what tests does the researcher then conduct? Why are such tests not necessary if the indep ...

Beta electronics is considering the purchase of testing

Beta Electronics is considering the purchase of testing equipment that will cost $633,000 to replace old equipment. Assume the new equipment will generate before-tax savings of $281,000 over the four years. The new equip ...

1 what is the difference between the assignment of a

1. What is the difference between the assignment of a take-out commitment to the construction lender and a triparty agreement? If neither device is used in project financing, what is the relationship between lenders in s ...

1 describe the circumstances in which it is acceptable to

1. Describe the circumstances in which it is acceptable to conduct research without obtaining informed consent from human participants. 2. What does IRB stand for, and what is its purpose? 3. Is it acceptable for researc ...

1 compare the advantages and disadvantages of using

1. Compare the advantages and disadvantages of using interviews versus questionnaires in survey research. 2. Compare a sample and a population. Under what circumstances can a sample be used to draw conclusions about a po ...

Briefly describe each of the following disbursement

Briefly describe each of the following disbursement products/methods: a. Zero-balance accounts (ZBAs) b. Controlled disbursement c. Positive pay How does a ZBA relate to the firm's target cash balance?

1 why is it not surprising to learn that growth rates

1. Why is it not surprising to learn that growth rates rarely show predictable trends? 2. The book value of a firm's common equity is usually lower than the market value of the common stock. Why? Can you describe a situa ...

Mini case amgen corporationthe amgen corporation spent

MINI CASE: AMGEN CORPORATION The Amgen Corporation spent several years working on developing a product that can be used to provide a healthy supplement to a variety of food products. The benefits of a new supplement have ...

  • 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