NPV and IRR. Higher Ground Company is presented with the following two mutually exclusive projects. The required
Question:
NPV and IRR. Higher Ground Company is presented with the following two mutually exclusive projects. The required return for both projects is 15 percent.
a. What is the IRR for each project?
b. What is the NPV for each project?
c. Which, if either, of the projects should the companyaccept?
Transcribed Image Text:
Year Project MProject N (S145,000)(S350,000) 155,000 175,000 140,000 105,000 63,000 81,000 72.000 58,000
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 72% (11 reviews)
a Computation of the IRR on each Project Year Cash Flow A Cash Flow B 0 145000 3500...View the full answer
Answered By
Saikumar Ramagiri
Financial accounting:- Journal and ledgers, preparation of trail balance and adjusted trail balance Preparation of income statement, retained earning statement and balance sheet Banks reconciliation statements Financial statement analysis Cash flow statement analysis (both direct and indirect methods) All methods of Depreciations Management Accounting:- Ratios Budgeting control Cash budget and production budget Working capital management Receivable management Costing:- Standard and variance costing Marginal costing and decision making Cost-volume-profit analysis Inventory management (LIFO, FIFO) Preparation and estimation of cost sheet Portfolio management:- Calculation of portfolio standard deviation or risk Calculation of portfolio expected returns CAPM, Beta Financial management:- Time value of money Capital budgeting Cost of capital Leverage analysis and capital structure policies Dividend policy Bond value calculations like YTM, current yield etc International finance:- Derivatives Futures and options Swaps and forwards Business problems Finance problems Education (mention all your degrees, year awarded, Institute/University, field(s) of major): Education Qualification Board/Institution/ University Month/Year of Passing % Secured OPTIONALS/ Major ICWAI(inter) ICWAI inter Pursuing Pursuing - M.com(Finance) Osmania University June 2007 65 Finance & Taxation M B A (Finance) Osmania University Dec 2004 66 Finance & Marketing. B.Com Osmania University June 2002 72 Income Tax, Cost & Mgt, Accountancy, Auditing. Intermediate (XII) Board of Intermediate May 1999 58 Mathematics, Accountancy, Economics. S S C (X) S S C Board. May 1997 74 Mathematics, Social Studies, Science. Tutoring experience: • 10 year experience in online trouble shooting problems related to finance/accountancy. • Since 6 Years working with solution inn as a tutor, I have solved thousands of questions, quick and accuracy Skills (optional): Technical Exposure: MS Office, SQL, Tally, Wings, Focus, Programming with C Financial : Portfolio/Financial Management, Ratio Analysis, Capital Budgeting Stock Valuation & Dividend Policy, Bond Valuations Individual Skills : Proactive Nature, Self Motivative, Clear thought process, Quick problem solving skills, flexible to complex situations. Achievements : 1. I have received an Award certificate from Local Area MLA for the cause of getting 100% marks in Accountancy during my Graduation. 2. I have received a GOLD MEDAL/Scholarship from Home Minister in my MBA for being the “Top Rank student “ of management institute. 3. I received numerous complements and extra pay from various students for trouble shooting their online problems. Other interests/Hobbies (optional): ? Web Surfing ? Sports ? Watching Comics, News channels ? Miniature Collection ? Exploring hidden facts ? Solving riddles and puzzles
4.80+
391+ Reviews
552+ Question Solved
Related Book For
Essentials of Corporate Finance
ISBN: 978-1259277214
9th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Question Posted:
Students also viewed these Corporate Finance questions
-
Reece Company is presented with the following two mutually exclusive projects. The required return for both projects is 15 percent. a. What is the IRR for each project? b. What is the NPV for each...
-
Kerron Company is presented with the following two mutually exclusive projects. The required return for both projects is 15 percent. Year _________Project M ___________Project N 0 .....................
-
Bausch Company is presented with the following two mutually exclusive projects. The required return for both projects is 15 percent. a. What is the IRR for each project?b. What is the NPV for each...
-
A red laser ( lambda r = 6 3 3 nm ) is shone through a narrow slit located 2 m from a screen. When the light source is replaced by a blue laser ( b = 4 8 8 nm ) the position of the first minimum of...
-
Fair Value Hedge: Put Options Over hill Farms Inc. has a large portfolio of marketable equity securities held as short-term investments. To protect against declines in the value of 10,000 shares of...
-
What value is contained in the floating point variable depth after the following statements are executed?
-
Use the method of Exercise 4 to find the variance of a lognormal variable in terms of the parameters of the underlying normal variable Data from Exercises 4 Suppose that \(u=e^{w}\), where \(w\) is...
-
Prince Corp. and Sprite Corp. reported the following balance sheets at January 1, 2017: On January 2, 2017, Prince issued $36,000 of stock and used the proceeds to purchase 90% of Sprite's common...
-
Please explain the optimal debt ratios and why do public utilities have high debt ratios? Please explain whether dividends increase or reduce shareholder value? How do you financially evaluate an...
-
On December 31, 2020, Helena Company, a California real estate firm, received two $18,000 notes from customers in exchange for services rendered. The 8% note from El Dorado Company is due in nine...
-
Consider the following two mutually exclusive projects: Whichever project you choose, if any, you require a 13 percent return on your investment. a. If you apply the payback criterion, which...
-
Calculating Present Values. 2007 was also a good year to be an NFL quarterback. Tony Romo of the Dallas Cowboys signed a contract reportedly worth $67.5 million. The contract called for $16 million...
-
The graphs below show three different lines of fit for the same set of data. For each graph, decide whether the line is a good line of fit or not, and explain why. a. b. c. 12 2 6 8 o 1H 12 2 4 6 0...
-
Daniel is a resident individual who carries on a retail business but does not use the SBE method of accounting for income in his business. On 30 June of the current tax year he had trade debtors of...
-
What role does agency play in the Hypodermic Model of Communication? Long after the model has been abandoned by experts in persuasion and mass media, why does this model live on as common sense?
-
Sophia operates a large singing school with 22 employees. She receives advance fee payments from students in respect of each course (a course consists of 26 lessons). If a student does not attend all...
-
What are the consequences for Dells cost structure and profitability of replacing inventories with information? Do you think that Dells business model can be imitated by other PC manufacturers and...
-
How might definitions of well-being differ across and within cultures? Why is this important to consider in a clinical psychology or health psychology context?
-
What might the above example imply that performance means?
-
Is it ethical to provide safety training in English to immigrant workers who speak little English, in order to reduce costs?
-
What is a futures contract? What are the advantages and disadvantages of futures contracts?
-
Several reasons have been proposed to justify mergers. Among the more prominent are (1) tax considerations, (2) risk reduction, (3) control, (4) purchase of assets at below-replacement cost, (5)...
-
Briefly describe the differences between a hostile merger and a friendly merger.
-
What are the steps in valuing a merger?
-
The articles of partnership for Pal - Trotter Partnership provide for a salary allowance of $ 5 , 3 0 0 per month for partner Trotter, with the balance of net income to be divided equally. If Trotter...
-
The City of Piglet reported property tax revenues in 2020 in the amount of $10 million. The deferred inflow-property taxes reported in the General Fund's balance sheet was $300,000 on December 31,...
-
Texas Roadhouse is expecting to earn $ 5 million in revenue for the next fiscal year. How much net income would the company need to generate from that revenue to achieve a net profit margin ratio of...
Study smarter with the SolutionInn App