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FIN Problem (10-23) Gardial Fisheries




Question;(10-23)Build a Model: CapitalBudgeting ToolsStart with the partial model in the fileCh10 P23 Build a Model.xlson the textbook?sWeb site. Gardial Fisheries is considering two mutually exclusive investments. Theprojects?expected net cash flows are as follows:Expected Net Cash FlowsYear Project A Project B0 -$375?$5751?300 1902?200 1903?100 1904 600 1905 600 1906 926 1907?200 0a. If each project?s cost of capital is 12%, which project should be selected? If thecost 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:Consider 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 twoprojects?h. What is the profitability index for each project if the cost of capital


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