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# Tarea - P.11 NPV versus IRR Consider the following cash...

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P.11 NPV versus IRR. Consider the following cash flows on two mutually exclusive projects for the Ba Year Deepwater Fishing New Submarine Ride 0 -750,000.00 -2,100,000.00 14% 1 310,000.00 1,200,000.00 2 430,000.00 760,000.00 3 330,000.00 850,000.00 As a financial analyst for BRC, you are asked the following questions: a. If your decision rule is to accept the project with the greater IRR, which project should you choose? b. Because you are fully aware of the IRR rule's scale problem, you calculate the incremental IRR for c. To be prudent, you compute the NPV for both projects. Which project should you choose? Is it cons a) Fishing Submarine IRR 20% 17% Eligiria el proyecto de Deepwater Fishing p b) Fishing Submarine 18% 16% Eligiria el proyecto de Deepwater Fishing p c) Fishing Submarine VPN 75,541.46 111,152.69 Eligiria el proyecto de New Submarine Rid P.14 Comparing Investment Criteria. Mario Brothers, a game manufacturer, has a new idea for an adv CD-ROM, but not both. Consider the following cash flows of the two mutually exclusive pro Year Board Game CD-ROM 0 -600.00 -1,900.00 10% 1 700.00 1,400.00 2 150.00 900.00 3 100.00 400.00 a. Based on the payback period rule, which project should be chosen? Board Game CD-ROM 0.86 años 1.56 años b. Based on the NPV, which project should be chosen? Board Game CD-ROM 235.46 417.05 c. Based on the IRR, which project should be chosen? Board Game CD-ROM 42% 25% d. Based on the incremental IRR, which project should be chosen? Board Game CD-ROM 23% 18% P.17: Comparing Investment Criteria. The treasurer of Amaro Canned Fruits, Inc., has projected the c Year Project A Project B Project C 0 -200,000.00 -400,000.00 -200,000.00 12% 1 140,000.00 260,000.00 150,000.00 2 140,000.00 260,000.00 120,000.00 Suppose the relevant discount rate is 12% a year.

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a. Compute the profitability index for each of 3 projects. Project A Project B Project C Rentabilidad 1.18 1.10 1.15 b. Compute the NPV for each of the 3 projects. Project A Project B Project C VNA 36,607.14 39,413.27 29,591.84 c. Suppose these 3 projects are independent. Which project(s) should Amaro accept based on the pro Eligiria los proyectos A y C ya que son mayores a la tasa de rendimiento d. Suppose these 3 projects are mutually exclusive. Which project (s) should Amaro accept based on Solo aceptaria el proyecto A que es el que tiene mayor rentabilidad e. Suppose Amaro's budget for these projects is \$600,000. The projects are not divisible. Which proje Se aceptarian los proyectos A y C, que son los que tienen menor costo y mayor rentabilidad. Problema 18. Comparing Investment Criteria. Consider the following cash flows of 2 mutually exclusiv Year Dry Prepreg Solvent Prepreg 0 -1,400,000.00 -600,000.00 10% 1 900,000.00 300,000.00 2 800,000.00 500,000.00 3 700,000.00 400,000.00 a. Based on the payback period, which project should be taken? Dry Prepreg Solvent Prepreg 1.63 años 1.60 años b. Based on the NPV, which project should be taken?
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