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  3. a company has the following 2 projects: projects c

A company has the following 2 projects: Projects C0 C1 C2 C3 A -36 20 20...

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Finance

A company has the following 2 projects: Projects C0 C1 C2 C3 A-36 20 20 20 B -50 25 25 25 Assume that the discount rate is 10%.How much is the difference between the NPV values of these 2projects (i.e., NPV of Project A minus NPV of Project B)? A) 0.57B) 1.57 C) 3.67 D) 4.67 E) 13.17

A company uses Internal Rate of Return(IRR) criteria to analyze the following two mutually exclusiveprojects:     

Project

C0

C1

C2

C3

NorthEast

-1100

1000

350

50

SouthWest

-1100

0

300

1500

   Assume that thiscompany’s opportunity cost of capital (i.e., Hurdle rate for IRRanalysis) is 10%. Then,

  1. which project should be accepted based on IRR analysis?
  2. how much is the IRR of this accepted project?  

    (i)               (ii)

         A)           ProjectNorthEast          20%

             B)ProjectSouthWest         19%

         C)           ProjectSouthWest         30%

             D)ProjectSouthWest         26%       

    E)    ProjectNorthEast          24%

Answer & Explanation Solved by verified expert
4.2 Ratings (912 Votes)
Project ANet present value is calculated using a financial calculator byinputting the below Press the CF button CF0 36 It is entered with a negative signsince it is a cash outflow Cash flow for each year should be entered Press Enter and down arrow after inputting eachcash flow After entering the last cash flow cash flowpress the NPV button and enter the discount rate of 10 Press enter after that Press the down arrow andCPT buttons to    See Answer
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