Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below.Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's averageproject. Bellinger's WACC is 12%.1Project AProject B0|-1,000-1,0001.82 years700300years2+3653003250400What is Project A's payback? Round your answer to four decimal places. Do not round intermediate calculations.years4300750What is Project A's discounted payback? Round your answer to four decimal places. Do not round intermediate calculations.What is Project B's payback? Round your answer to four decimal places. Do not round intermediate calculations.3 yearsWhat is Project B's discounted payback? Round your answer to four decimal places. Do not round intermediate calculations.

Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 12%. 1 Project A -1,000 Project B -1,000 1.82 years 0 years 700 300 2 + 365 300 What is Project A's payback? Round your answer to four decimal places. Do not round intermediate calculations. 3 + 250 400 years 4 1 300 750 What is Project A's discounted payback? Round your answer to four decimal places. Do not round intermediate calculations. What is Project B's payback? Round your answer to four decimal places. Do not round intermediate calculations. 3 years What is Project B's discounted payback? Round your answer to four decimal places. Do not round intermediate calculations.

Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 12%. 1 Project A -1,000 Project B -1,000 1.82 years 0 years 700 300 2 + 365 300 What is Project A's payback? Round your answer to four decimal places. Do not round intermediate calculations. 3 + 250 400 years 4 1 300 750 What is Project A's discounted payback? Round your answer to four decimal places. Do not round intermediate calculations. What is Project B's payback? Round your answer to four decimal places. Do not round intermediate calculations. 3 years What is Project B's discounted payback? Round your answer to four decimal places. Do not round intermediate calculations.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 21P: Your division is considering two investment projects, each of which requires an up-front expenditure...

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Your division is considering two investment projects, each of which requires an up-front expenditure of 25 million. You estimate that the cost of capital is 10% and that the investments will produce the following after-tax cash flows (in millions of dollars): a. What is the regular payback period for each of the projects? b. What is the discounted payback period for each of the projects? c. If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake? d. If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake? e. If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake? f. What is the crossover rate? g. If the cost of capital is 10%, what is the modified IRR (MIRR) of each project?
Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, neti operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 8%. 2 3 4 0 1 Project A -1,250 600 Project B -1,250 200 What is Project A's MIRR? Do not round intermediate calculations. Round your answer to two decimal places 96 Show All Feedback 450 385 240 390 290 740 Show All Feedback What is Project B's MIRR? Do not round Intermediate calculations. Round your answer to two decimal places. Chuck M En remaining)
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 11%. 0 1 2 3 4 Project A -1,050 600 360 300 290 Project B -1,050 200 295 450 740 What is Project A’s IRR? Do not round intermediate calculations. Round your answer to two decimal places. % Hide Feedback Incorrect Check My Work Feedback Review the IRR equation.The solution for IRR is a percentage rate not a dollar value.The IRR calculation is not dependent on the firm's WACC.Don't forget the minus sign for the Year 0 cash flow.Don't forget to include the Year 0 cash flow in your…
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 11%. 0 1 2 3 4 Project A -1,000 700 430 290 340 Project B -1,000 300 365 440 790 What is Project A's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. % What is Project B's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. %
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 11%. 0 1 2 3 4 Project A -1,200 650 445 210 260 Project B -1,200 250 380 360 710 What is Project A's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. % What is Project B's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. % If the projects were independent, which project(s) would be accepted according to the MIRR method? If the projects were mutually exclusive, which project(s) would be accepted according to the…
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 12%. 0 1 2 3 4 Project A -950 700 355 280 330 Project B -950 300 290 430 780 What is Project A's payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project A's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project B's payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project B's discounted payback? Do…
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 9%. 0 1 2 3 4 Project A -1,300 640 310 280 400 Project B -1,300 240 245 430 850 What is Project A’s IRR? Do not round intermediate calculations. Round your answer to two decimal places. % What is Project B's IRR? Do not round intermediate calculations. Round your answer to two decimal places. % If the projects were independent, which project(s) would be accepted according to the IRR method? If the projects were mutually exclusive, which project(s) would be accepted according to the…
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 8%. 0 1 2 3 4 Project A -1,250 650 380 250 300 Project B -1,250 250 315 400 750 What is Project A's payback? Do not round intermediate calculations. Round your answer to four decimal places What is Project A's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places What is Project B's payback? Do not round intermediate calculations. Round your answer to four decimal places What is Project B's discounted payback? Do not round intermediate calculations.…
Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 12%. 0 1 2 3 Project A -1,450 650 250 Project B -1,450 What is Project A's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. 435 370 260 410 310 760 What is Project B's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. If the projects were independent, which project(s) would be accepted according to the MIRR method? -Select- If the projects were mutually exclusive, which project(s) would be accepted according to the MIRR method? -Select-
Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 11%. 1 2 4 Project A -1,050 600 360 300 290 Project B -1,050 200 295 450 740 What is Project A's IRR? Do not round intermediate calculations. Round your answer to two decimal places. % What is Project B's IRR? Do not round intermediate calculations. Round your answer to two decimal places. % If the projects were independent, which project(s) would be accepted according to the IRR method? -Select- If the projects were mutually exclusive, which project(s) would be accepted according to the IRR method? -Select- Could…
Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 11%. 0 1 2 3 4 Project A -1,350 650 365 220 270 Project B -1,350 250 300 370 720 What is Project A's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. % What is Project B's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. % If the projects were independent, which project(s) would be accepted according to the MIRR method? If the projects were mutually exclusive, which project(s) would be…
Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 11%. 0 1 2 3 4 Project A -1,050 600 360 300 290 Project B -1,050 200 295 450 740 What is Project A’s IRR? Do not round intermediate calculations. Round your answer to two decimal places. _________ % What is Project B's IRR? Do not round intermediate calculations. Round your answer to two decimal places. _________% If the projects were independent, which project(s) would be accepted according to the IRR method? If the projects were mutually exclusive, which…