Here are the annual after-tax cash flows for four projects. Projects A, B, C and D...
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Here are the annual after-tax cash flows for four projects. Projects A, B, C and D are mutually exclusive. No. 0 1 2 3 A -10 000$ 2 000$ 5 000$ 8 000$ B -25 000$ 17 000$ 6 000$ 2 000$ -7 000$ 4 000$ 5 000$ 9 000$ D Note 1: For this question, assume that inflation does not exist. -29 600$ 19 000$ 10 000$ 19 000$ a) Explain in a few words why project B can be totally neglected before doing the differential analysis. (5 points) b) Based on the differential analysis of the IRR criteria (internal rate of return), which project should be retained in order to be as profitable as possible? The firm's MARR (minimum acceptable rate of return) is 10%. (15 points) Note: You must use the differential process and demonstrate, by at least one calculation, that you are able to calculate the value of an IRR. Here are the annual after-tax cash flows for four projects. Projects A, B, C and D are mutually exclusive. No. 0 1 2 3 A -10 000$ 2 000$ 5 000$ 8 000$ B -25 000$ 17 000$ 6 000$ 2 000$ -7 000$ 4 000$ 5 000$ 9 000$ D Note 1: For this question, assume that inflation does not exist. -29 600$ 19 000$ 10 000$ 19 000$ a) Explain in a few words why project B can be totally neglected before doing the differential analysis. (5 points) b) Based on the differential analysis of the IRR criteria (internal rate of return), which project should be retained in order to be as profitable as possible? The firm's MARR (minimum acceptable rate of return) is 10%. (15 points) Note: You must use the differential process and demonstrate, by at least one calculation, that you are able to calculate the value of an IRR.
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a Project B can be totally neglected before doing the differential analysis because its initial inve... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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