| 10.7 |
| A | B |
| -15000000 | -15000000 |
| 5000000 | 20000000 |
| 10000000 | 10000000 |
| 20000000 | 6000000 |
| $16,108,951.52 | $18,300,939.42 | 5% | npv | a |
| $12,836,213.37 | $15,954,169.80 | 10% |
| $10,059,587.41 | $13,897,838.42 | 15% |
| 43.97% | 82.03% | | irr | b |
| 10.8 |
| Truck | Pulley |
| -17100 | -22430 | 0.14 |
| 5100 | 7500 |
| 5100 | 7500 |
| 5100 | 7500 |
| 5100 | 7500 |
| 5100 | 7500 |
| 14.99% | 19.999% | | irr |
| $408.71 | $3,318.11 | | npv | accept both projects |
| 14.54% | 17.19% | | mirr |
| 10.10 |
| Project S | Project L |
| -10000 | -25000 |
| 3000 | 7400 |
| 3000 | 7400 |
| 3000 | 7400 |
| 3000 | 7400 |
| 3000 | 7400 |
| $814.33 | $1,675.34 | | npv | L | L |
| 15.24% | 14.67% | | irr | S |
| 13.77% | 13.46% | | mirr | S |
| 1.081 | 1.067 | | pi | S |
| 10.13 |
| Interest rate | NPVA | NPVB | A | B |
| 0 | $1,288.00 | $820.00 | -400 | -650 |
| 10 | $478.83 | $372.37 | -528 | 210 |
| 12 | $366.13 | $308.39 | -219 | 210 |
| 14 | $265.40 | $250.54 | -150 | 210 |
| 18 | $94.46 | $150.42 | 1100 | 210 |
| 20 | $21.98 | $106.96 | 820 | 210 |
| 25 | ($128.74) | $13.84 | 990 | 210 |
| 30 | ($244.71) | ($61.56) | -325 | 210 |
| | | | | | a |
| | 20.7% | 25.8% | | | b |
| | Select A at 10% cost of capital | | | | c. |
| | $133.76 | $173.70 | | | c. | Select B | at 17% cost of capital |
| | 14.91% | 17.35% | | | d. | mirr at 10% |
| | 18.76% | 21.03% | | | d. | 17% |
| Crossover rate |
| CFA-CFB |
| 250 | | Below the crossover rate, select A, above the crossover rate select B. |
| -738 |
| -429 |
| -360 |
| 890 |
| 610 |
| 780 |
| -535 |
| 14.76% |
| 10.18 |
| NPV |
| 190-3 | 360-6 |
| -190000 | -360000 |
| 87000 | 98300 |
| 87000 | 98300 |
| 87000 | 98300 |
| | 98300 |
| | 98300 |
| | 98300 |
| $11,981.99 | $22,256.02 |
| $5,161.02 | $5,723.30 | select B |
| The value of the firm would increase by the npv. |
| 10.12 |
| Initial investment | | | -1065000 |
| Purchase price | 900000 | | 350000 |
| Installation costs | 165000 | | 350000 |
| Initial investment | | | 350000 |
| | 1065000 | | 350000 |
| | | | 350000 |
| $136,578.34 |
| 19.22% |
| 10.21 | | A | B |
| a. | Period | Annual CF | Annual CF |
| | 0 | -25000000 | -25000000 |
| | 1 | 5000000 | 20000000 |
| | 2 | 10000000 | 10000000 |
| | 3 | 15000000 | 8000000 |
| | 4 | 20000000 | 6000000 |
| | Payback | 2 years | 0.6666666667 | A | | | a. |
| | | 2.67 | years |
| | | 1 year | 0.5 |
| | Payback | 1.5 years | | B |
| b. | Discounted Payback |
| | | A | B |
| | Period | Annual CF | Annual CF | Disc Rate | Disc CF-A | Disc CF-B |
| | 0 | -25000000 | -25000000 |
| | 1 | 5000000 | 20000000 | 0.9090909091 | 4545454.54545454 | 18181818.1818182 |
| | 2 | 10000000 | 10000000 | 0.826446281 | 8264462.80991735 | 8264462.80991735 |
| | 3 | 15000000 | 8000000 | 0.7513148009 | 11269722.0135237 | 6010518.40721262 |
| | 4 | 20000000 | 6000000 | 0.6830134554 | 13660269.1073014 | 4098080.73219042 |
| | Discounted Payback A |
| | | | | | 24079639.3688956 |
| | | | | 3years | 0.0673750005 | 3.067375 | b |
| | Discounted Payback B |
| | | | | | 1 year | 0.825 |
| | | | | | 1.825 | years |
| | A | B |
| | $12,739,908.48 | $11,554,880 | A and B should be selected with positive npvs | | | | c. |
| | $18,243,813.02 | $14,964,829 | A should be selectedwith the higher npv. | | | | d. |
| | $8,207,071.16 | $8,643,390.4 | B should be selected. | | | | e |
| | | | | | | | f |
| | CFA - CFB |
| | 0 |
| | -15000000 |
| | 0 |
| | 7000000 |
| | 14000000 |
| | 13.53% |
| | 21.93% | 20.96% | | | | | g. |
denittawhite
cls15130151.xlsx
