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Corporate Finance: NPV

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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 oneâ??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?

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Solution Summary

The solution determines the projects NPV.

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