Caledonia Products Integrative Practice Problem
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Caledonia Products Integrative Practice Problem
Prepare a response to the Caledonia Products Integrative Problem
In your response, be sure to address the following:
1. Formulate answers to questions 12a-12e
Caledonia is considering two additional mutually exclusive projects. The cash flows associated with these project are as follows:
Year Project A Project B
0 -$100,000 -$100,000
1 32,000 0
2 32,000 0
3 32,000 0
4 32,000 0
5 32,000 $200,000
The required rate of return of these projects is 11 percent.
a) What is each project's payback period?
b) What is each project's new present value?
c) What is each project's internal rate of return?
d) What has caused the ranking conflict?
e) Which project should be accepted? Why?
2. Describe the factors that Caledonia would have to consider if they were doing a lease versus buy for the two projects.
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Solution Summary
Response discusses Caledonia Products Integrative Practice Problem
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For Q1 see the attached excel file
2. Describe the factors that Caledonia would have to consider if they were doing a lease versus buy for the two projects.
As per bizmove.com, "A lease is a long term agreement to ...
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