Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. these are the cash flows for two projects. calcula

These are the cash flows for two projects. Calculate the NPV and IRR for both. Then...

60.1K

Verified Solution

Question

Finance

These are the cash flows for two projects. Calculate the NPV andIRR for both. Then select the best project according to the NPVmeasure. Use a WACC of 10% for both projects. The investments are 7for project 1, and 8 for project 2.

Cash flows for project 1

year

1

2

3

4

cash

4

6

2

4

Cash flows for project 2

year

1

2

3

4

cash

3

2

7

4

Calculate the NPV for project 1. Remember to use 10% as theWACC.

Calculate the IRR for project 1. Remember the WACC is 10%. Givethe answer in percent.

Calculate the NPV for project 2, use a 10% WACC.

Calculate the IRR for project 2, write the result inpercent.

According to the NPV criterion, which is the best project toinvest in?

Answer & Explanation Solved by verified expert
4.4 Ratings (675 Votes)
1 project 1 NPV Present value of cash inflows present value of cash outflows NPV 7 4 1 011 6 1 012 2 1 013 4 1 014 NPV 583 2 IRR is the rate of return that    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

These are the cash flows for two projects. Calculate the NPV andIRR for both. Then select the best project according to the NPVmeasure. Use a WACC of 10% for both projects. The investments are 7for project 1, and 8 for project 2.Cash flows for project 1year1234cash4624Cash flows for project 2year1234cash3274Calculate the NPV for project 1. Remember to use 10% as theWACC.Calculate the IRR for project 1. Remember the WACC is 10%. Givethe answer in percent.Calculate the NPV for project 2, use a 10% WACC.Calculate the IRR for project 2, write the result inpercent.According to the NPV criterion, which is the best project toinvest in?

Other questions asked by students

Q

In a titration of a 100.0mL 1.00M NH3 solution with 1.00M HCl, what is the pH...

Chemistry
Q

• What should auditor do when risk of fraud with regards to cash is increased? • What are...

Accounting
Q

1 V 25 2 5 V 3 V 5 4 25 V If work done...

Physics
Q

Given the toolkit function f(x) = x2, write the equation of the transformed function g(x)...

Basic Math
Q

Let R be the region bounded by the following curves Use the shell method to...

Calculus
Q

Sheffield, Inc. is considering purchasing equipment costing $54000 with a 6-year useful life. The equipment...

Accounting
Q

To prepare a master budget for Aprll, May, and June, management gathers the...

Accounting
Q

Illinois Bank lends Lisle Furniture Company $100,000 on December 1. Lisle Furniture Company signs a...

Accounting
Q

Please help. The budgets of four companies yield the following information: Read the...

Accounting
Q

the benefit(s) and cost(s) of auditors providing non-audit services on audit quality

Accounting
Q

Q1- Shabnam's Qubec payroll totals for the 2018 taxation year were as follows: salary of...

Accounting
Q

Required information [The following information applies to the questions displayed below] In each of the...

Accounting