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##### Grand Canyon FIN650 module 3 chapter 10 problem

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Question;Chapter 10. Chapter 10 P23 Build a Model;Gardial Fisheries is considering two mutually exclusiveinvestments. The projects' expected net cash flows are as follows;Expected;Net Cash Flows;12%;Expected;Net Cash Flows;18%;Expected;Net Cash Flows;Time;Project A;Project B;Time;Project A;Project B;Time;Project A;Project B;0;\$375;\$575;0;(\$375);(\$375);0;(\$575);(\$575);1;\$300;(\$190);1;(\$268);(\$254);1;\$170;\$161;2;\$200;(\$190);2;(\$159);(\$144);2;\$151;\$136;3;\$100;(\$190);3;(\$71);(\$61);3;\$135;\$116;4;(\$600);(\$190);4;\$381;\$309;4;\$121;\$98;5;(\$600);(\$190);5;\$340;\$262;5;\$108;\$83;6;(\$926);(\$190);6;\$469;\$343;6;\$96;\$70;7;\$200;\$0;7;(\$90);(\$63);7;\$0;\$0;a. If each project's cost of;capital is 12%, which project should be selected? If the cost of capital is 18%, what;project is the proper choice?;b.;Construct NPV profiles for Projects A and B.;c.;What is each project's IRR?d.;What is the crossover rate, and what is its significance?e. What is each;project's MIRR at a cost of capital of 12%?;At r = 18%? (Hint: Conside Period 7 as the end of;Project B's life.)f.;What is the regular payback period for these two projects?g.;At a cost of capital of 12%, what is the discounted payback period for;these two projects?h.;What is the profitability index for each project if the cost of;capital is 12%?

Paper#49111 | Written in 18-Jul-2015

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