You are considering two mutually exclusive projects with unequal lives. One of the projects has an up-front cost of $60,000 (CF0= -60,000) and produces positive after- tax cash inflows of $20,000 a year at the end of each of the next 7 years. Assuming the cost of capital is 9.3%, what is the equivalent annual annuity of the project? $5,948 $6,398 $7,298 $7,958 $8,828 $9,788
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- You are considering two mutually exclusive projects with unequal lives. One of the projects has an up-front cost of $59,000 (CF0= -59,000) and produces positive after-tax cash inflows of $21,000 a year at the end of each of the next 5 years. Assuming the cost of capital is 9.2%, what is the equivalent annual annuity of the project?Your company is considering two mutually exclusive projects. Project A has an initial cost of $80,000 and generates expected cash flows of $25,000 per year for six years. Project B has an initial cost of $80,000 and generates expected cash flows of $60,000 per year for two years. The firm's cost of capital is 12.00%. Determine which project you would choose. Group of answer choices Choose B since the equivalent annuity payment is $12,664. Choose A since the equivalent annuity payment is $5,542. Choose B since the NPV is $22,785. Choose A since the NPV is $21,403.5. Cannot decide since two projects do not have equal life.You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $9.6 million. Investment A will generate $1.86 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.55 million at the end of the first year, and its revenues will grow at 2.2% per year for every year after that. Which investment has the higher IRR? (Round to the nearestinteger.) Which investment has the higher NPV when the cost of capital is 7.8%? In this case, for what values of the cost of capital does picking the higher IRR give the correct answer as to which investment is the best opportunity?
- You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10 million. Investment A will generate $2 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.5 million at the end of the first year and its revenues will grow at 2% per year for every year after that. (1) Which investment has the higher IRR? (2) Which investment has the higher NPV when the cost of capital is 7%? (3) In this case, for what values of the cost of capital does picking the higher IRR give the correct answer as to which investment is the best opportunity?Let's say you have a project which will cost $25mm to build or buy. It will produce after-tax cash flows of $4mm for 9 years with each cash flow occurring at the end of the year. At the end of the 9 years, you will also receive a residual value payment of $3mm. What is the IRR of the project? Round to the nearest one decimal place and use the % symbol. 6.3% would be the form of a correct answer.You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10.15 million. Investment A will generate $2.15 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.58 million at the end of the first year, and its revenues will grow at 2.5% per year for every year after that. a. Which investment has the higher IRR? b. Which investment has the higher NPV when the cost of capital is 5.6%? c. In this case, when does picking the higher IRR give the correct answer as to which investment is the best opportunity? a. Which investment has the higher IRR? The IRR of investment A is%. (Round to two decimal places.)
- You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10 million. Investment A will generate $2 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.5 million at the end of the first year and its revenues will grow at 2% per year for every year after that. a. Which investment has the higher IRR? b. Which investment has the higher NPV when the cost of capital is 7%? c. In this case, when does picking the higher IRR give the correct answer as to which investment is the better opportunity?You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $9.8 million. Investment A will generate $2.06 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.51 million at the end of the first year, and its revenues will grow at 2.7% per year for every year after that. a. Which investment has the higher IRR? b. Which investment has the higher NPV when the cost of capital is 5.5%? c. In this case, for what values of the cost of capital does picking the higher IRR give the correct answer as to which investment is the best opportunity?You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10.3 million. Investment A will generate $2.13 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.52 million at the end of the first year, and its revenues will grow at 2.1% per year for every year after that. a. Which investment has the higher IRR? b. Which investment has the higher NPV when the cost of capital is 5.3%? c. In this case, when does picking the higher IRR give the correct answer as to which investment is the best opportunity?
- You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10.3 million. Investment A will generate $2.17 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.48 million at the end of the first year, and its revenues will grow at 2.6% per year for every year after that. a. Which investment has the higher IRR? b. Which investment has the higher NPV when the cost of capital is 5.9%? c. In this case, for what values of the cost of capital does picking the higher IRR give the correct answer as to which investment is the best opportunity?You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10.1 million. Investment A will generate $2.09 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.47 million at the end of the first year, and its revenues will grow at 2.3% per year for every year after that. a. Which investment has the higher IRR? b. Which investment has the higher NPV when the cost of capital is 6.6%? c. In this case, when does picking the higher IRR give the correct answer as to which investment is the best opportunity? a. Which investment has the higher IRR? The IRR of investment A is %. (Round to two decimal places.) The IRR of investment B is %. (Round to two decimal places.) Based on the IRR, you would pick investment A (Select from the drop-down menu.) b. Which investment has the higher NPV when the cost of capital is 6.3%? If the cost of capital is 6.3%, the NPV of investment A is $ million.…You can make an investment that will immediately cost $52,000. If you make the investment, your after-tax operating profit will be $13,000 per year for five years. After the five years, the profit will be zero, and the scrap value also will be zero. You will finance the investment with internally generated funds and receive the profit at the end of each year. The net present value equation for this investment is: NPV=$| (Carefully enter your answer as an algebraic expression, using the proper notation in the proper format. Do not use the letter x to denote the multiplication sign.)