A firm is considering the adoption of a project that is expected to generate revenues for 10 years. These expected revenues (in dollars) are:

Year 1: $200,000 Year 6: $270,000
Year 2: 250,000 Year 7: 255,000
Year 3: 300,000 Year 8: 240,000
Year 4: 300,000 Year 9: 150,000
Year 5: 280,000 Year 10: 75,000

The total cost of the project, to be paid immediately upon adoption, is $1.6 million. Use a spreadsheet to compute the net present value of the project if:

A. The firm's cost of capital is 6 percent. Should the project be adopted?

B. The firm's cost of capital is 8 percent. Should the project be adopted?

Suppose the firm has a second project that requires an initial outlay of $800,000 and is expected to generate revenues for only five years, and those revenues are of the same amounts as given above for years 1 to 5. Use the same spreadsheet to compute the net present value of this project if:

C. The firm's cost of capital is 6 percent. Is this project one that the firm would like to adopt?

If these are the only two projects that the firm is contemplating, what should the firm do if:

D. Its capital budget is $1 million and its cost of capital is 6 percent?
E. Its capital budget is $3 million and its cost of capital is 6 percent?

XYZ is evaluating a project with the following annual net cash flows:
0 year=-$600
1 year=$50
2 year=$100
3 year=$150
4 year=$350
5 year=$100
1) XYZ is a small company with limited resources, its managers are concerned about how capital will be tied up in projects. What is the project's payback period? Assume XYZ's ca

Please view attachment for question.
a. Calculate the NPV, IRR, Profitability Index, and MIRR for this project with a cost of capital of 12%.
(see attached)
b.For a single conventional project, the NPV and IRR will agree on whether to invest or to not invest. However, in the case of two mutually exclusive projects, th

Using the table identify the "crossover point" AND briefly describe the significance when the crossover rate is greater than the cost of capital for mutually exclusive projects. Why is the IRR method less reliable when evaluating mutually exclusive projects?
Discount Rate(%) NPV of Project A NPV of Project B
0

Please see attached file.
1) The X Corp has identified the following two mutually exclusive projects. X Corp has a cost of capital of 10%. What is the NPV, IRR and PI of each project and which project should they accept and why?
TIME PROJECT A PROJECT B
0 -10,000 -10,000
1 12,000 100
2 100 100
3 100 100
4 100 16,000

As the director of capital budgeting for ABC Corporation, you are evaluating two mutually exclusive projects with the following net cash flows:
Cash Flows
A B
-$200,000 -$125,000
1 $65,000 $60,000
2 $60,000 $40,000
3 $50,000 $40,000
4 $65,000 $35,000
5 $50,000 $45,000
If ABC Corporation's cost of capital is 12 percent

As the director of capital budgeting for Denver Corporation, you are evaluating two mutually exclusive projects with the following net cash flows:.
Year Project X cash flow Project Z cash flow
0 -$100,000 -$100,000
1 50,000 10,000
2

Many firms use the weighted average cost of capital for the firm as the hurdle rate when comparing to IRR or as the discount rate in an NPV calculation. However, there is an implicit assumption being made when one does that. What problems can one encounter or what errors may occur if one uses the WACC for evaluating all projec

If a company is evaluating two mutually exclusive projects. Their cost of capital is 15 percent. Costs and cash flows are given in the following table. Which project should be accepted? Calculate NPV and IRR to formulate your decision.
Year Project 1 Project 2
0 ($1,250,000) ($1,250,000)
1

The NPV rule, which says companies should invest in projects for which NPV is greater than 0, depends on the assumption of value maximization.
True or false?

B5. (Investment criteria) Pierre Bouvier is evaluating four projects. The cash flows for the four
projects are given here.
a. Pierre thinks you can rank these projects from best to worst by simply inspecting the
cash flows (and not calculating anything). Try to do so.
b. Pierre next found the NPV of each project, discounti