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Corporate Finance: NPV

11-1
NPV Project K costs 52,125, its expected net cash inflows are 12,000 per year for 8 years, and its WACC is 12% What is the projects NPV?

11-2
IRR Refer to problem 11-1 What is the IRR?

11-4
Payback period: Refer to problem 11-1. What is the MIRR?

11-7
CAPITAL BUDGETING CRITERIA. A firm with 14% WACC is evaluating two projects for this years capital budget After tax cash flows,, including depreciation, are as follows:
Project A 0/-6000 1/2000 2/2,000 3/2,000 4/2,000 5/2,000
Project B 0/-18,000 1/5,600 2/ 5,600 3/5,600 4/5,600 5/5,600
a. Calculate NPV,IRR, MIRR payback, and discounted payback for each project
b. Assuming the projects are independent, which oneĆ¢??s would you recommend?
c. If the projects are mutually exclusive, which on would you recommend?
d. Notice that the principals have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?

11-10
CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS: A firm with a WACC of 10% is considering the following mutually exclusive project:
Project A 0/-400 1/55 2/55 3/55 4/$225 5/$225
Project B 0/-600 1/300 2/300 3/50 4/50 5/49
Which project would you recommend?

11-12
IRR AND NPV A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:
Project S 0/-1,000 1/900 2/250 3/10 4/10
Project L 0/-1,000 1/$0 2/250 3/400 4/800
The company's WACC is 10% What is the IRR of the better project?

Solution Summary

The solution determines the projects NPV.

$2.19