Cooper Electronics uses NPV profiles to visually evaluate competing projects. Key data for the two projects under consideration are given in the following table: Initial investment 28,000 24,000 Year Operating cash inflows 1 8,000 7,000 2 12,000 10,000 3 10,000 7,000 4 9,000 7,000 Terra Firma Initial Investment $28000 $24000 Year Cash Flows 1 $8000 $7000 2 $12000 $10000 3 $10000 $7000 4 $9000 $7000 Using these data, graph, on the same set of axes, the NPV profiles for each project using discount rates of 0%, 8%, and the IRR. The IRR of project Terra is 14.57% (Round to two decimal places.) The IRR of project Firma is 11.3%. (Round to two decimal places.) If the discount rate is 0%, the NPV of project Terra is $11000 (Round to the nearest cent.) If the discount rate is 0%, the NPV of project Firma is $7000. (Round to the nearest cent.) If the discount rate is 8%, the NPV of project Terra is $4249.06. (Round to the nearest cent.) If the discount rate is 8%, the NPV of project Firma is $1756.90. (Round to the nearest cent.) If the discount rate is the project's IRR, the NPV of project Terra is $. (Round to the nearest cent.) If the discount rate is the project's IRR, the NPV of project Firma is $. (Round to the nearest cent.)

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 2PA

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Cooper Electronics uses NPV profiles to visually evaluate competing

projects.

Key data for the two projects under consideration are given in the following table:

Initial investment 28,000 24,000
Year Operating cash inflows
1 8,000 7,000
2 12,000 10,000
3 10,000 7,000
4 9,000 7,000

	Terra	Firma
Initial Investment	$28000	$24000
Year	Cash	Flows
1	$8000	$7000
2	$12000	$10000
3	$10000	$7000
4	$9000	$7000

Using these data, graph, on the same set of axes, the NPV profiles for each project using discount rates of 0%, 8%, and the IRR.

The IRR of project Terra is 14.57% (Round to two decimal places.)

The IRR of project Firma is 11.3%. (Round to two decimal places.)

If the discount rate is 0%, the NPV of project Terra is $11000 (Round to the nearest cent.)

If the discount rate is 0%, the NPV of project Firma is $7000. (Round to the nearest cent.)

If the discount rate is 8%, the NPV of project Terra is $4249.06.
(Round to the nearest cent.)

If the discount rate is 8%, the NPV of project Firma is

$1756.90. (Round to the nearest cent.)

If the discount rate is the project's IRR, the NPV of project Terra is

$______. (Round to the nearest cent.)

If the discount rate is the project's IRR, the NPV of project Firma is

$______. (Round to the nearest cent.)

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