Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table. The firm's cost of capital is 15%.
Project X Project Y
Initial investment (CF0) $500,000 $325,000
Year (t) Cash inflows (CFt)
1 $100,000 $140,000
2 120,000 120,000
3 150,000 95,000
4 190,000 70,000
5 250,000 50,000
a. Calculate the IRR to the nearest whole percent for each of the project.
b. Assess the acceptability of each project on the basis of the IRRs found in part A.
c. Which project, on this basis, is preferred?
Please see the excel file attached.
IRR is calculated by Excel function:
Solution explains Mutually exclusive projects for new warehouse capacity
Profitability Measurements for Walmart, Target, & Costco
Calculate the following profitability measurments for Wal-Mart, Target, and Costco using the information found in their 2013 Annual Reports. Calculations must be written out.
Gross Profit Percentage
Profit Margin Percentage
Return on Investment
Return on Equity
Earnings Per ShareView Full Posting Details