Purchase Solution

Taussig Technologies is considering two potential projects,

Not what you're looking for?

Ask Custom Question

Taussig Technologies is considering two potential projects, X and Y. In assessing the projects' risks, the company estimated the beta of each project versus both the company's other assets and the stock market, and it also conducted thorough scenario and simulation analyses. This research produced the following numbers: Correlation of the project cash flows with cash flows from currently existing projects. Cash flows are not correlated with the cash flows from existing projects. Cash flows are highly correlated with the cash flows from existing projects.

Project X Project Y
Expected NPV $350,000 $350,000
Standard deviation (NPV) $100,000 $150,000
Project beta (vs. market) 1.4 0.8

Correlation of the project cash flows with cash flows from currently existing projects. Cash flows are not correlated with the cash flows from existing projects. Cash flows are highly correlated with the cash flows from existing projects.

Which of the following statements is CORRECT?

Project X has more stand-alone risk than Project Y.
Project X has more corporate (or within-firm) risk than Project Y.
Project X has more market risk than Project Y.
Project X has the same level of corporate risk as Project Y.
Project X has less market risk than Project Y.

Purchase this Solution
Solution Summary

The solution looks at the correlation of the project cash flows with cash flows from currently existing projects. Cash flows are not correlated with the cash flows from existing projects. Cash flows are highly correlated with the cash flows from existing projects.

Solution Preview

Taussig Technologies is considering two potential projects, X and Y. In assessing the projects' risks, the company estimated the beta of each project versus both the company's other assets and the stock market, and it also conducted thorough scenario and simulation analyses. This research produced the following numbers: Correlation of the project cash flows with cash flows from currently existing projects. Cash flows are not correlated with the cash flows from existing projects. Cash ...

Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Operations Management

This quiz tests a student's knowledge about Operations Management

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

View More Free Quizzes
Related BrainMass Solutions

  • NPV, Project Analysis, WACC

    Taussig Technologies is considering two potential projects, X and Y.

  • Supernormal Growth Stock Valuation

    340539 Supernormal Growth Stock Valuation for Taussig Technologies: Calculate yields Taussig Technologies Corporation (TTC) has been growing at a rate of 20% per year in recent years.

  • Finance: Taussig Technologies, Upton Company growth rate, capital gains, dividend yield

    5051 Taussig Technologies, Upton Company Growth Rate, Etc. Please help with these 2 questions (8-23,24) in calculations using a calculator (TI BAII Plus or HP12C).

  • Multiple Choice

    What is the value of the firm according to MM with corporate taxes? A) $475,875 B) $528,750 C) $587,500 D) $646,250 E) $710,875 9. Taussig Technologies is considering two potential projects, X and Y.

  • Pfizer

    Identify the process used to select this project over other potential projects including key components of the selection methodology and priorities. Evaluate elements of selection criteria that might have been included but were not and why not.

  • Google's new projects research

    The potential for all of these would be world changing, but I would think that Google Fiber is the most likely to succeed quickly. Thank you for asking Brainmass. Five of the potential research projects under Google's for future use.

  • Profitability Index versus NPV and Comparing Investment Criteria

    It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects for Hanmi. Assume the discount rate for Hanmi is 10%.

  • SPT job sequencing rule application

    397446 Adv Technologies: SPT Job Sequencing You have been hired by Adv Technologies, a company that provides customer technology projects, and asked to explore the potential use of the SPT job sequencing rule. the firms next five jobs are detailed below

  • Potential IT Professions

    151293 Potential IT Professions Write a 200- to 300-word description of at least two professions in these fields.

View More Related Solutions