Problem 6.a: A manufacturing firm is considering the mutually exclusive alternatives given in the table below. Determine the IRR on incremental investment (IRR of the difference). do not use % sign in your answer 2012 n Net Cash Flow Project A1 - $4,000 2,600 2,800 Project A2 - $5,000 3,600 3,200

Problem 6.a: A manufacturing firm is considering the mutually exclusive alternatives given in the table below. Determine the IRR on incremental investment (IRR of the difference). do not use % sign in your answer 2012 n Net Cash Flow Project A1 - $4,000 2,600 2,800 Project A2 - $5,000 3,600 3,200

Name: Problem 6.a: A manufacturing firm is considering the mutually exclusi
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Description: Problem 6.a: A manufacturing firm is considering the mutually exclusive alternativesgiven in the table below. Determine the IRR on incremental investment (IRR of thedifference). do not use % sign in your answern012Net Cash FlowProject A1- $4,0002,60

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 23SP

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please colud you explain me what how you using calculator or computation to determine NPV or IRR. A firm has the following investment alternatives: Year A B C 1 $400 $--- $-- 2 400 400 --- 3 400 800 --- 4 400 800 1,800 Each investment costs $1,400, and the firm's cost of capital is 10 percent. a. What is each investment's internal rate of return? b. Should the firm make any of these investment? c. What is each investment's net present value? d. Should the firm firm make any of these investments?
Q.1. Three mutually exclusive investment alternatives are under consideration. The initial capital outlays and the pattern of the net annual cash benefits (revenues - expenses) for each alternatives are presented in the following table. Based on NPV analysis, if the company’s minimum acceptable rate of return is 10%, which alternative should be the best economic choice? Use appropriate IRR analysis to double-check your selection. Investment, M$ A B C Initial cost -$200 -$350 -$500 Net Revenues, year 1 to 3 $80 $105 $85 Net Revenues, year 4 $60 $90 $150 Net Revenues, year 5 $40 $80 $250
Alt 3. Both companies are considering an investment in Project One, Project Two, and Project Three. All three projects carry an average amount of risk for each company. Both companies use Payback, NPV and IRR to make investment decisions. The cash flows for both projects are shown below. a. Based on NPV, What projects would Apt be likely to invest in? b. Based on IRR, what projects woutd Heart be tikety to invest in? c. Which project has the fastest payback? Why might that be important to the investment decision? d. If money had no time value, which project would be the best decision? Project One: $10 million initial investment and $2million of free cash flow at the end of each year for 15 years. Project Two: $5 million initial investment. Free cash flows for 5 years : Yr. 1 = $3 million, Yr. 2 = $1.5 million, Yrs. 3-5 = 0.5 million Project Three: Initial investment of $20 million. One Free Cash flow of $40 million in 8 years. No other Free Cash Flows.
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