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Question;Use the table for the question(s);below.;Consider the following two projects;Project;Year 0;Cash Flow;Year 1;Cash Flow;Year 2;Cash Flow;Year 3;Cash Flow;Year 4;Cash Flow;Discount Rate;A;-100;40;50;60;N/A;.15;B;-73;30;30;30;30;.15;18);Assume that projects A and B are mutually;exclusive. The correct investment;decision and the best rational for that decision is to?;A);Invest in project A since NPVB IRRA;C);Invest in project B since NPVB> NPVA;D);Invest in project A since NPVA> 0;19);The incremental IRR of Project B over;Project A is closest to;A);12.6%;B);23.3%;C);1.7%;D);17.3%;Use the table for the question(s);below.;Consider the following two projects;Project;Year 0;C/F;Year 1;C/F;Year 2;C/F;Year 3;C/F;Year 4;C/F;Year 5;C/F;Year 6;C/F;Year 7;C/F;Discount;Rate;Alpha;-79;20;25;30;35;40;N/A;N/A;15%;Beta;-80;25;25;25;25;25;25;25;16%;20);Assume that projects Alpha and Beta are;mutually exclusive. The correct;investment decision and the best rational for that decision is to?;A);Invest in project Beta since NPVBeta> 0;B);Invest in project Alpha since NPVBeta IRRA;D);Invest in project Beta since NPVBeta> NPVAlpha> 0;Use the table for the question(s);below.;Consider two mutually exclusive projects with the following cash;flows;Project;C/F0;C/F1;C/F2;C/F3;C/F4;C/F5;C/F6;A;$(41,215);$12,500;$14,000;$16,500;$18,000;20,000;N/A;B;$(46,775);$15,000;$15,000;$15,000;$15,000;$15,000;$15,000;WS1);You are considering using the incremental;IRR approach to decide between the two mutually exclusive projects A;B. How many potential incremental IRRs;could there be?;A);3;B);0;C);2;D);1;WS2);What is the incremental IRR for project B;over project A? Would you feel;comfortable basing your decision on the incremental IRR?.;WS3);Assuming that the discount rate for;project A is 16% and the discount rate for B is 15%, then given that these are;mutually exclusive projects, which project would you take and why?;6.4 Project Selection with Resource;Restraints;Use the table for the question(s);below.;Consider the following list of projects;Project;Investment;NPV;A;135,000;6,000;B;200,000;30,000;C;125,000;20,000;D;150,000;2,000;E;175,000;10,000;F;75,000;10,000;G;80,000;9,000;H;200,000;20,000;I;50,000;4,000;21);Assuming that your capital is constrained;what is the fifth project that you should invest in?;A);Project H;B);Project I;C);Project B;D);Project A;22);Assuming that your capital is constrained;so that you only have $600,000 available to invest in projects, which project;should you invest in and in what order?;A);CBFH;B);CBGF;C);BCFG;D);CBFG;23);Assume that your capital is constrained;so that you only have $600,000 available to invest in projects. If you invest in the optimal combination of;projects given your capital constraint, then the total NPV for all the projects;you invest in will be closest to;A);$65,000;B);$80,000;C);$69,000;D);$111,000

 

Paper#62456 | Written in 18-Jul-2015

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