Hyde Company is considering two capital investments. Both investments have an initial cost of $6,000,000 and...
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Hyde Company is considering two capital investments. Both investments have an initial cost of $6,000,000 and total net cash inflows of $14,000,000 over 10 years. Hyde requires a 20% rate of return on this type of investment. Expected net cash inflows are as follows: (Click the icon to view the expected net cash inflows.) Read the requirements. Requirement 1. Use Excel to compute the NPV and IRR of the two plans. Which plan, if any, should the company pursue? (Use parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Alpha is $ The NPV (net present value) of Plan Beta is $ The IRR (internal rate of return) of Plan Alpha is $ The IRR (internal rate of return) of Plan Beta is $ Which plan, if any, should the company pursue? Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV ar The internal rate of return is the interest rate that makes tl rate of return and if the net present value is negative, the %. %. the company's required rate of return. s relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? because the NPV is Plan Alpha Plan Beta OTTITOR OF FOR.. is of an investment and the IRR is the required rate of return. Thus, if an investment's net present value is positive, the internal rate of return is the required Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV and IRR. Based on this relationship The internal rate of return is the interest rate that makes the net present value of an investm rate of return and if the net present value is negative, the internal rate of return is because the NPV is and the IRR is the company's required rate of return. s required rate of return, are your answers as expected in Requirement 1? Why or why not? Thus, if an investment's net present value is positive, the internal rate of return is negative positive og ate of return. the required Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV and IRR. Based on this relationship and the company's require The internal rate of return is the interest rate that makes the net present value of an investment rate of return and if the net present value is negative, the internal rate of return is because the NPV is and the IRR is the required rate of re the company's required rate of return. greater than less than our answers as expected in Requirement 1? Why or why not? S, if an investment's net present value is positive, the internal rate of return is the required The internal rate of return is the interest rate that makes the net present value of an investment rate of return and if the net present value is negative, the internal rate of return is Based on this relationship and the company's required rate of return, are your answers as expec Based on the relationship described above, the internal rate of return and net present value calc the required rate of return. For Plan Beta, the net present value is and Thus, if an investment's net present value is positive, the internal rate of return is equal to zero. greater than the original cost. less than the sum of the cash inflows. ...G as expected. For Plan Alpha, the net present value is required rate of return. the required and the internal rate of return is Based on this relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans the required rate of return. For Plan Beta, the net present value is and the internal rate of return is Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NP Enter any number in the edit fields and then continue to the next question. are as expected. For Plan Alpha, the net present value is te of return. are not and the internal rate of return is ch plan, if any, should the company pursue? (Use Excel to determine your answers. Use Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans and the internal rate of return is as expected. For Plan Alpha, the net present value is the required rate of return. For Plan Beta, the net present value is the required rate of return. Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Us Enter any number in the edit fields and then continue to the next question. and the internal rate of return is negative positive ine your answers. Use Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans the required rate of return. For Plan Beta, the net present value is and the internal rate of return is greater than less than value) of Plan Alpha is $ further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use is sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Beta is $ as expected. For Plan Alpha, the net present value is the required rate of return. 11 and the internal rate of return is Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans and the internal rate of return is the required rate of return. For Plan Beta, the net present value is Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recal parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calcula The NPV (net present value) of Plan Alpha is $ as expected. For Plan Alpha, the net present value is the required rate of return. greater than less than and the internal rate of return is R. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use laces, X.XX%.) Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Alpha is $ The NPV (net present value) of Plan Beta is $ The IRR (internal rate of return) of Plan Alpha is $ The IRR (internal rate of return) of Plan Beta is $ Which plan, if any, should the company pursue? %. %. OA. The company should not pursue either plan because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. B. If the company has sufficient resources and the plans are not mutually exclusive, it should pursue both plans because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. If the company must choose only one plan, it should pursue Plan Beta because it has the higher NPV and IRR. C. If the company has sufficient resources and the plans are not mutually exclusive, it should pursue both plans because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. If the company must choose only one plan, it should pursue Plan Alpha because it has the lower NPV and IRR. O D. The company should not pursue either plan because the NPV is negative and the IRR is less than the company's required rate of return for both plans. Hi Data Table Year Plan Alpha 1 2 3 4 5 6 LO 7 8 9 10 Total $ Plan Beta $ 1,400,000 $ 1,400,000 1,400,000 1,800,000 1,400,000 2,200,000 1,400,000 1,800,000 1,400,000 1,400,000 1,400,000 700,000 1,400,000 600,000 1,400,000 500,000 1,400,000 400,000 1,400,000 3,200,000 14,000,000 $ 14,000,000 Print x Done Hyde Company is considering two capital investments. Both investments have an initial cost of $6,000,000 and total net cash inflows of $14,000,000 over 10 years. Hyde requires a 20% rate of return on this type of investment. Expected net cash inflows are as follows: (Click the icon to view the expected net cash inflows.) Read the requirements. Requirement 1. Use Excel to compute the NPV and IRR of the two plans. Which plan, if any, should the company pursue? (Use parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Alpha is $ The NPV (net present value) of Plan Beta is $ The IRR (internal rate of return) of Plan Alpha is $ The IRR (internal rate of return) of Plan Beta is $ Which plan, if any, should the company pursue? Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV ar The internal rate of return is the interest rate that makes tl rate of return and if the net present value is negative, the %. %. the company's required rate of return. s relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? because the NPV is Plan Alpha Plan Beta OTTITOR OF FOR.. is of an investment and the IRR is the required rate of return. Thus, if an investment's net present value is positive, the internal rate of return is the required Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV and IRR. Based on this relationship The internal rate of return is the interest rate that makes the net present value of an investm rate of return and if the net present value is negative, the internal rate of return is because the NPV is and the IRR is the company's required rate of return. s required rate of return, are your answers as expected in Requirement 1? Why or why not? Thus, if an investment's net present value is positive, the internal rate of return is negative positive og ate of return. the required Based on the results above, the company should pursue Requirement 2. Explain the relationship between NPV and IRR. Based on this relationship and the company's require The internal rate of return is the interest rate that makes the net present value of an investment rate of return and if the net present value is negative, the internal rate of return is because the NPV is and the IRR is the required rate of re the company's required rate of return. greater than less than our answers as expected in Requirement 1? Why or why not? S, if an investment's net present value is positive, the internal rate of return is the required The internal rate of return is the interest rate that makes the net present value of an investment rate of return and if the net present value is negative, the internal rate of return is Based on this relationship and the company's required rate of return, are your answers as expec Based on the relationship described above, the internal rate of return and net present value calc the required rate of return. For Plan Beta, the net present value is and Thus, if an investment's net present value is positive, the internal rate of return is equal to zero. greater than the original cost. less than the sum of the cash inflows. ...G as expected. For Plan Alpha, the net present value is required rate of return. the required and the internal rate of return is Based on this relationship and the company's required rate of return, are your answers as expected in Requirement 1? Why or why not? Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans the required rate of return. For Plan Beta, the net present value is and the internal rate of return is Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NP Enter any number in the edit fields and then continue to the next question. are as expected. For Plan Alpha, the net present value is te of return. are not and the internal rate of return is ch plan, if any, should the company pursue? (Use Excel to determine your answers. Use Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans and the internal rate of return is as expected. For Plan Alpha, the net present value is the required rate of return. For Plan Beta, the net present value is the required rate of return. Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Us Enter any number in the edit fields and then continue to the next question. and the internal rate of return is negative positive ine your answers. Use Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans the required rate of return. For Plan Beta, the net present value is and the internal rate of return is greater than less than value) of Plan Alpha is $ further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use is sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Beta is $ as expected. For Plan Alpha, the net present value is the required rate of return. 11 and the internal rate of return is Based on the relationship described above, the internal rate of return and net present value calculated in Requirement 1 for the two plans and the internal rate of return is the required rate of return. For Plan Beta, the net present value is Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recal parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calcula The NPV (net present value) of Plan Alpha is $ as expected. For Plan Alpha, the net present value is the required rate of return. greater than less than and the internal rate of return is R. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use laces, X.XX%.) Requirement 3. After further negotiating, the company can now invest with an initial cost of $5,600,000 for both plans. Recalculate the NPV and IRR. Which plan, if any, should the company pursue? (Use Excel to determine your answers. Use parentheses or a minus sign for a negative NPV. Round the NPV calculations to the nearest whole dollar and the IRR calculations to two decimal places, X.XX%.) The NPV (net present value) of Plan Alpha is $ The NPV (net present value) of Plan Beta is $ The IRR (internal rate of return) of Plan Alpha is $ The IRR (internal rate of return) of Plan Beta is $ Which plan, if any, should the company pursue? %. %. OA. The company should not pursue either plan because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. B. If the company has sufficient resources and the plans are not mutually exclusive, it should pursue both plans because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. If the company must choose only one plan, it should pursue Plan Beta because it has the higher NPV and IRR. C. If the company has sufficient resources and the plans are not mutually exclusive, it should pursue both plans because the NPV is positive and the IRR is greater than the company's required rate of return for both plans. If the company must choose only one plan, it should pursue Plan Alpha because it has the lower NPV and IRR. O D. The company should not pursue either plan because the NPV is negative and the IRR is less than the company's required rate of return for both plans. Hi Data Table Year Plan Alpha 1 2 3 4 5 6 LO 7 8 9 10 Total $ Plan Beta $ 1,400,000 $ 1,400,000 1,400,000 1,800,000 1,400,000 2,200,000 1,400,000 1,800,000 1,400,000 1,400,000 1,400,000 700,000 1,400,000 600,000 1,400,000 500,000 1,400,000 400,000 1,400,000 3,200,000 14,000,000 $ 14,000,000 Print x Done
Expert Answer:
Answer rating: 100% (QA)
Year 0 1 Req 3 2 3 4 5 6 7 8 9 10 Plan Alpha Cash Flows 6000000 1400000 1400000 1400000 1400000 1400... View the full answer
Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
Posted Date:
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