We're Open
+44 7340 9595 39
+44 20 3239 6980

Which project(s) should you accept if the discount rate is 7 percent?

Information



  • Post Date 2018-11-05T12:16:08+00:00
  • Post Category Essays

No Plagiarism Guarantee - 100% Custom Written

Order Details

Which project(s) should you accept if the discount rate is 7 percent?

Cash Flow Writing Assignments: Projects With Positive NPV

INSTRUCTIONS:

Writing assignments (Due Saturday as a Word or Excel file) Show ALL Work
You are considering two mutually exclusive projects with the following cash flows. Which project(s) should you accept if the discount rate is 7 percent? What if the discount rate is 10 percent?

Radiology Associates is considering an investment which will cost $259,000. The investment produces no cash flows for the first year. In the second year, the cash inflow is $58,000. This inflow will increase to $150,000 and then $200,000 for the following two years before ceasing permanently. The firm requires a 14 percent rate of return and has a required discounted payback period of three years. Accept or reject this project? Why?

CONTENT:

Name

Institution

Date

Writing assignments (Due Saturday as a Word or Excel file) Show ALL Work
You are considering two mutually exclusive projects with the following cash flows. Which project(s) should you accept if the discount rate is 7 percent? What if the discount rate is 10 percent?

At 7 % the NPV for project A is cash inflows – cash outflows, ($ 360,000* 0.8163) - $275,0000= $18,868

Project B, NPV= $113,600*0.0.9346+ ($81,900*0.8734) + ($47,000*0.8163) - $202,000= $14,068

At 10 % NPV project A= ($360,000*0.7513) - $ 360,000= ($4,532)

NPV Project B = ($116,600*0.9091) + ($81,900*0.8264) + ($47,000*0.7513) - $202,000= $4,267

* At 7% choose Project A with higher NPV

* At 10% choose project B with higher NPV

1 Radiology Associates is considering an investment which will cost $259,000. The

...

Price: £ 99

100% Plagiarism Free & Custom Written, Tailored to your instructions