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

Modify the cpl lagrangian heuristic to account for the case

Modify the CPL Lagrangian heuristic to account for the case where the demand is indivisible (i.e. the demand of any successor node must be satisfied by a single facility). Is the modified heuristic still time-polynomial? ...

What type of constraints may a client impose on a portfolio

What type of constraints may a client impose on a portfolio manager? If an investment in stock has a value of $3,000 at the beginning of the year and $3,500 at the end of the year, and paid a dividend of $250 at the end ...

1 what are the main reasons that lenders charge interest on

1. What are the main reasons that lenders charge interest on loans? 2. Give an example of a financial transaction that requires a payment in the future. 3. If you deposit $1,000 in a bank CD that pays interest of 3% per ...

1 how many conditions are there in the simplest possible

1. How many conditions are there in the simplest possible experiment? 2. Describe how participants are assigned to conditions in randomized groups, matched-subjects, and repeated measures experimental designs. 3. What ar ...

1 what kinds of organizations must consider disaster

1. What kinds of organizations must consider disaster preparedness? 2. What is the difference between mitigation and preparedness? 3. What are the steps involved in the preparedness cycle? 4. Name the ways that the Natio ...

Should a slip-critical joint be analyzed as a friction-type

Should a slip-critical joint be analyzed as a friction-type or bearing-type joint? Describe some of the applications in which slip-critical joints are mandated? What is the difference between a pretension and a slip-crit ...

Discussion lets discuss the following based on the assigned

Discussion: Let's discuss the following (based on the assigned and recommneded reading): 1. Is Paying a Premium for Certain Securities Worth the Price? Are portfolio managers willing to pay a premium for securities that ...

Raymond borrowed 300000 from loans r us company the line of

Raymond borrowed $3,000.00 from Loans R Us Company. The line of credit agreement provided for repayment of the loan in equal monthly payments of $668.76 which includes interest of 9.00 % per annum calculated on the unpai ...

1 what is the significance of the passive activity loss

1. What is the significance of the passive activity loss limitation (PAL) rules for real estate investors? 2. What factors affect a property's projected NOI? 3. ARGUS. Refer to the Monument Office Building example. Suppo ...

Assignment delta airlines property plant and equipmentus

Assignment : Delta Airlines Property, Plant, and Equipment U.S. companies and foreign companies are affected by deprecation rules. When companies write off the cost of long-lived assets over a period of time, the term us ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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