Question: QUESTION 1 Use the following data to answer the next 3 questions: You are evaluating two mutually exclusive projects (expected cash flows shown below). The

QUESTION 1 Use the following data to answer the next 3 questions: You are evaluating two mutually exclusive projects (expected cash flows shown below). The firm's cost of capital is 10 percent. (Round each amount to the nearest cent) Year Project A Proiect (725) (725) 120 460 200 300 375 110 Calculate the Discounted Payback Period for Project A A 2.60 B.3.59 C. 1.80 0.3.28 E 3.07 QUESTION 3 Draw the NPV profiles for the mutually exclusive projects A and B. Which of the following statements is most FALSE? A The crossover must be caused by the difference in the reinvestment rates used by NPV and IRA since the sizes of the projects are equal. B. Since NPV and IRR disagreed as to which project was better, the profiles had to cross in the positive quadrant C. If the firm's cost of capital were 12%, Project B should be chosen D. Project A's NPV profite intercepts the vertical axis at $390. E. The NPV profiles for Projects A and B cross at 10.4905 percent
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