Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 9) a firm with a wacc of 10% is considering the fo

9) A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 4 5 Project 1 -$200 $70 $70 $70 $165 $165 Project 2 -$550 $300 $300 $130 $130 $130 Which...

90.2K

Verified Solution

Question

Finance

9)

A firm with a WACC of 10% is considering the following mutuallyexclusive projects:

012345
Project 1-$200$70$70$70$165$165
Project 2-$550$300$300$130$130$130

Which project would you recommend?

Select the correct answer.

a. Neither Project 1 nor 2, since each project's NPV <0.
b. Project 2, since the NPV2 >NPV1.
c. Both Projects 1 and 2, since both projects have IRR's >0.
d. Project 1, since the NPV1 >NPV2.
e. Both Projects 1 and 2, since both projects have NPV's >0.

Answer & Explanation Solved by verified expert
3.7 Ratings (384 Votes)
Project 1Discount rate10000Year012345Cash flow stream200707070165165Discounting factor100011001210133114641611Discounted cash flows project200000636365785152592112697102452NPV Sum of discounted cash flowsNPV Project 1 18923WhereDiscounting factor 1 discount rateCorresponding period in    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

9)A firm with a WACC of 10% is considering the following mutuallyexclusive projects:012345Project 1-$200$70$70$70$165$165Project 2-$550$300$300$130$130$130Which project would you recommend?Select the correct answer.a. Neither Project 1 nor 2, since each project's NPV <0.b. Project 2, since the NPV2 >NPV1.c. Both Projects 1 and 2, since both projects have IRR's >0.d. Project 1, since the NPV1 >NPV2.e. Both Projects 1 and 2, since both projects have NPV's >0.

Other questions asked by students

Q

15 When is a rectangle a square a When diagonals are congruent b When diagonals...

Geometry
Q

In an effort to simplify what organisational development is, some have suggested that organisational development and...

Operations Management
Q

how I can do the Operational feasibility for the new business as a  retail store

Finance
Q

A person living at high altitude, where the partial pressure of oxygen is very low, would...

Medical Sciences
Q

Using your answers to the above questions fill in the workout chart below with a...

Biology
Q

In the figure shown rod AB is light and rigid while rod CD is also...

Physics
Q

What is the Current Quick Ratio given the following information? Current Assets = $750 Inventory...

Accounting
Q

The Board of Directors of JUMBO Ltd is considering a new investment proposal. It is...

Accounting
Q

A grandmother deposited $4,000 in an account that pays 8% per year compounded annually when...

Accounting
Q

Lets assume beginning work in process was $29,000 and manufacturing costs incurred for the month...

Accounting
Q

Required information An electric switch manufacturing company is trying to decide between three different assembly...

Accounting
Q

Marwicks Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,492...

Accounting