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Grand Canyon FIN650 module 3 chapter 10 problem




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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