# Question

Consider the following cash flows of two mutually exclusive projects for AZ-Motorcars. Assume the discount rate for AZ- Motorcars is 10 percent.

a. Based on the payback period, which project should be accepted?

b. Based on the NPV, which project should be accepted?

c. Based on the IRR, which project should be accepted?

d. Based on this analysis, is incremental IRR analysis necessary? If yes, please conduct the analysis.

a. Based on the payback period, which project should be accepted?

b. Based on the NPV, which project should be accepted?

c. Based on the IRR, which project should be accepted?

d. Based on this analysis, is incremental IRR analysis necessary? If yes, please conduct the analysis.

## Answer to relevant Questions

The treasurer of Amaro Canned Fruits, Inc., has projected the cash flows of projects A, B, and C as follows:Suppose the relevant discount rate is 12 percent a year. a. Compute the profitability index for each of the three ...This problem is useful for testing the ability of financial calculators and computer software. Consider the following cash flows. How many different IRRs are there? Year Cash Flow0 ......... -$ 1,0081 ......... ...Which of the following should be treated as an incremental cash flow when computing the NPV of an investment? a. A reduction in the sales of a company’s other products caused by the investment. b. An expenditure on plant ...Suppose in the previous problem that HISC always needs a conveyor belt system; when one wears out, it must be replaced. Which system should the firm choose now?In the previous problem, Hagar Industrial Systems Company (HISC) ...Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $975,000, and its economic life is five years. The machine will be fully depreciated by the ...Post your question

0