You are presented with two proposal, A and B, with equal risk that require initial investment of $9,000 and $7,000 Subsequent net cash inflows are given as followed Year Project A Project B 1 $3,250 $2,500 2 3500 2,500 3 3500 3,000 4 3500 3,000 Assuming 14 cost of capital, rank the two projects in ...

a Inc reme ntal Rate of Re turn Pro ject A 3 25 0 3 500 35 00 3500 90 ...

You are presented with two-proposal, A and B, with equal risk that require initial investment of $9,000

Fantastic news! We've Found the answer you've been seeking!

Question:

You are presented with two-proposal, A and B, with equal risk that require initial investment of $9,000 and $7,000. Subsequent net cash inflows are given as followed

Year	Project A	Project B
1	$3,250	$2,500
2	3500	2,500
3	3500	3,000
4	3500	3,000

Assuming 14% cost of capital, rank the two projects in terms of:

-Incremental rate of return

-Net present value

How do you account for the difference in ranking? Which project do you prefer? Why?

Related Book For answer-question

Intermediate Accounting

ISBN: 978-0071339476

Volume 1, 6th Edition

Authors: Beechy Thomas, Conrod Joan, Farrell Elizabeth, McLeod Dick I

See More Books

Posted Date: Dec 23, 2022 01:40 AM

See More Questions

You are presented with the following data from Jake Doyle Inc. for the year ended 31 December 20X1. Additional information: a. Sold property, plant, and equipment for cash. Cost of the assets was $...
How do we account for investing activities? This chapter described various types of long-term assets and how companies account for the acquisition, use, and disposal of these assets. Which assets a...
How do we account for operating activities? This chapter considered the estimation and reporting of revenues and expenses. A companys income statement is affected by estimates of sales returns,...
In this assignment, you will take on the role of the Warden of a maximum custody state correctional facility. Your unit's use of force incidents has dramatically increased over the last year to...
ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. ABC is all equity financed with $650,000 in stock. XYZ uses both stock and perpetual debt; its stock is...
How does the liquidation of a controlled subsidiary differ from the liquidation of a corporation owned by a single individual? What is the reason for the difference?
When exposed to an infection, a person typically develops antibodies. The extent to which the antibodies respond can be measured by looking at a person's titer, which is a measure of the number of...
McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $875 per set and have a variable cost of $430 per set. The company has spent $150,000 for a marketing study that...
What are "meta" tags for? How can you provide information for Google using Meta tags on your page?
Today is May 17, 2023, and you, CPA, are a Senior Tax Associate at Borden & Laurier LLP. Sylvie Condurache, Tax Manager, has called you into her office to discuss a long-time client: "I just got out...
Suppose that the genders of the three children of a family are soon to be revealed. An outcome is represented by a string of the sort GBB (meaning the oldest child is a girl, the second oldest is a...
Consider a bond that has 10 years to maturity. The bond's annual coupon rate is 6%, and its face ents-with value is $1,000. The required rate of return on other investments with similar...
An investor buys a property for $654,000 with a 25-year mortgage and monthly payments at 6.1% APR. After 18 months the investor resells the property for $712,913. How much cash will the investor have...
iBank located in Singapore has the following balance sheet (in million): < Assets < Cash Duration < S$20 Interbank loans S$40 1 year Loans < S$240 5 years T-Bill S$100 Total assets: < S$400 < 1 year...
In order for Comac, a Chinese state-owned aerospace manufacturer, to build the C919, the government of China conducted numerous cyber attacks. The purpose of these hacking attacks was to steal...
The bank is offering a 25 year amortized mortgage loan at 5.25 percent with a 5 year term. a. Calculate your monthly payments for this loan. Show your work! (4 marks) b. Prepare an amortization table...
Suppose that the market expected return is 10% with standard deviation of 20%. As- sume further the risk-free rate is 5%. You are considering an active investment strategy (call it "A"). Your...
How much more interest will be earned if $5000 is invested for 6 years at 7% compounded continuously, instead of at 7% compounded quarterly?
A major spare part is replaced in a machine at a cost of $ 100,000. here is a remain-ing carrying amount of the old part of $ 2,000. How is the $ 2,000 treated?
What is noncontrolling interest (NCI)? How does it arise?
What information is required for implementing component depreciation when a new asset has been acquired by a company?
In the STAR experiment (Section 7.5.3), children were randomly assigned within schools into three types of classes: small classes with 13-17 students, regular-sized classes with 22-25 students, and...
Professor Ray C. Fair's voting model was introduced in Exercise 2.23. He builds models that explain and predict the U.S. presidential elections. See his website at...
Many cities in California have passed Inclusionary Zoning policies (also known as below-market housing mandates) as an attempt to make housing more affordable. These policies require developers to...

You are presented with two-proposal, A and B, with equal risk that require initial investment of $9,000

Question:

Expert Answer:

a Inc reme ntal Rate of Re turn Pro ject A 3 25 0 3 500 35 00 3500 90... View the full answer

Intermediate Accounting

Students also viewed these finance questions