1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
aniked [119]
2 years ago
6

Bruin, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 37,500 –$ 37,50

0 1 17,300 5,700 2 16,200 12,900 3 13,800 16,300 4 7,600 27,500
1. What is the IRR for each of these projects? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
IRR
Project A %
Project B %
2. Using the IRR decision rule, which project should the company accept?
a. Project A
b. Project B
3. Is this decision necessarily correct?
a. Yes
b. No
4. If the required return is 11 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
a. NPV Project A
b. NPV Project B
5. Which project will the company choose if it applies the NPV decision rule?
a. Project A
b. Project B
5. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Business
1 answer:
sp2606 [1]2 years ago
6 0

Answer:

Year             Cash Flow (A)            Cash Flow (B)

0                      -37,500                      -37,500

1                         17,300                         5,700

2                        16,200                       12,900

3                        13,800                       16,300

4                         7,600                       27,500

1) Using an excel spreadsheet and the IRR function:

IRR project A = 20%

IRR project B = 19%

2) Using the IRR decision rule, Bruin should choose project A.

3) In this case, since the length of the projects is only 4 years, then there should be no problem with the IRR decision rule, but for projects with longer time lengths, the discounts rates might vary and the best option is to use the modified internal rate of return (MIRR). But in this case the NPV of project B is higher, then Bruin should probably project B because it has a higher NPV. The NPV is always more important then the IRR.

4) Again using an excel spreadsheet and the NPV function:

NPV project A = $6,331

NPV project B = $8,139

5) first we must subtract cash flows from A by the  cash flows from B:

1      $11,600

2     $3,300

3    -$2,500

4   -$19,900

then we calculate the IRR = 16%

Bruin should be indifferent between the two projects at a 16% discount rate. That means that at discount rates above 16%, you should choose project A, but at discount rates below 16%, you should choose project B

You might be interested in
In Sid's Surf Shop, there is a 10-foot long surf board on legs with swimwear on it near the entrance to the department where sur
shtirl [24]

Answer: Free Standing display Unit.

Explanation:

Free standing display units( FSDU), also known as Floor Standing Display Units are cost effective ways used to showcase a product, they are noticeable ways of advertising by placing a brand in such a manner or position that will be most attractive to customers or target customers. Such brands are specifically placed in customer's way, FSDU are special customized display units that can be easily made from cardboards or other materials which can be formex stands.

3 0
3 years ago
As treasury secretary, Alexander Hamilton Select one: a. wanted to eliminate the national debt. b. opposed the federal governmen
Anna35 [415]

Answer:

C) supported the creation of a national bank.

Explanation:

As the first treasury secretary, Alexander Hamilton supported the creation of a national bank because he believed it would strengthen the national economy, since the country had been recently formed.

He finally succeeded in creating the Bank of the United States in 1791, which was the first national bank of the US. The Bank of the US started operating in 1797 in Philadelphia.

5 0
3 years ago
One year ago, you purchased 500 shares of stock for $22 a share. The stock pays $0.32 a share in dividends each year. Today, you
Vadim26 [7]

Answer:

Return on investment=12.81%

Explanation:

<em>Return on investment for a stock comprises of the capitals and dividend earned on the stock.</em>

<em>The capital gain is the difference between he cost of the shares when it was bought and the value when it is sold.</em>

Capital gain = (24.50 -22)× 500= 1250

Dividend earned for a year = 0.32× 500 =160

Total return = 1250  + 160 =1,410

Total return = $1,410

Cost of the shares= 11,000

Return on investment = total return/cost of shares× 100

                                     =1,410 /11,000 ×  100= 12.81

Return on investment=12.81%

3 0
3 years ago
According to the video, what are a Computer Programmer's real skills? Check all that apply.
choli [55]

Answer:

1 3 thx for the answer!

Explanation:

3 0
2 years ago
Read 2 more answers
A firm agreed to pay its workers ​$2525 an hour in 2016 and ​$4141 an hour in 2017. The price level for these years was 241 in 2
NemiM [27]

Answer:

(a) 10.4%; 16.73%

(b) 6.33%

Explanation:

Given that,

Wages paid to the workers in 2016 = $25 per hour

Price level in 2016 = 241

Wages paid to the workers in 2017 = $41 per hour

Price level in 2017 = 245

Real wage rate in 2016:

= (Nominal wages ÷ Price level) × 100

= ($25 ÷ 241) × 100

= 0.104 × 100

= 10.4%

Real wage rate in 2017:

= (Nominal wages ÷ Price level) × 100

= ($41 ÷ 245) × 100

= 0.1673 × 100

= 16.73%

Therefore, the real wage increase received by these workers in​ 2017 is calculated as follows:

= Real wage rate in 2017 - Real wage rate in 2016

= 16.73% -  10.4%

= 6.33%

Hence, these workers do get a raise between the two years.

8 0
2 years ago
Other questions:
  • Management now needs to determine the number of engines to be produced in each plant in each month, as well as the number of eng
    10·1 answer
  • Mike is registering his real estate company. He has a license and all of his sales associates and broker associates have license
    9·1 answer
  • Which of the following activities do marketers use as a way to lower product costs? A. Shop around for the best suppliers B. Off
    6·2 answers
  • some people have argued that the reported unemployment rate actually understates the extent of unemployment . explain this reaso
    10·1 answer
  • A trademark is a device that can take almost any form as long as it is capable of identifying and distinguishing specific produc
    11·1 answer
  • Sau khi thực hiện kiểm toán, KTV xác định là:
    12·1 answer
  • Which leadership factor is defined as giving pep talks, asking employees for advice and praising their work, keeping them inform
    10·2 answers
  • The rhaegel corporation's common stock has a beta of 1. if the risk-free rate is 4.5 percent and the expected return on the mark
    14·1 answer
  • which of the following is omitted in a barter transaction?a) tradeb) medium of exchangec) store of valued) money
    13·1 answer
  • With respect to hedge fund investing, the net return to an investor in a fund of funds would be lower than that earned from an i
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!