Purchase Solution

evaluate cost of capital, NPV, IRR

Not what you're looking for?

Ask Custom Question

Please see attached file:

Gardial Fisheries is considering two mutally exclusive ingestments. The projects expected cash flow are as follows:

Expected Net Cash Flow
Year Projected A Projected B
0 ($375) ($575)
1 ($300) 190
2 ($200) 190
3 ($100) 190
4 $600 190
5 $600 190
6 $926 190
7 ($200) 0

a) If you were told that each projects's cost of capital was 12%, which project should be selected? If the cost of capital was 18%, what would be the proper choice?
b) Construct NPV profiles for A and B
c) What is each project's IRR?
d) What is the crossover rate, and what is its significance?
e) What is each project's MIRR at a cost of capital of 12%? At r=18% (Hint: Consider Peroid 7 as the end of Project B's life)
f) What is the regular payback for those two projects?
g) At a cost of capital of 12%, what is the discounted payback period for these two projects?

Purchase this Solution

Solution Summary

This explains the steps to evaluate cost of capital, NPV, IRR

Solution Preview

Expected Net Cash Flow

Year Projected A Projected B
0 ($375) ($575)
1 ($300) 190
2 ($200) 190
3 ($100) 190
4 $600 190
5 $600 190
6 $926 190
7 ($200) 0

a) If you were told that each projects's cost of capital was ...

Purchase this Solution


Free BrainMass Quizzes
Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.