10 at what discount rate would the company be indifferent between these two projects? Ideas

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umble’s Bees, Inc., has identified the following two mutually exclusive projects:
a. What is the IRR for each of these projects? If you apply the IRR decision rule, which project should the company accept? Is this decision necessarily correct?
b. If the required return is 11 percent, what is the NPV for each of these projects? Which project will you choose if you apply the NPV decision rule?
c. Over what range of discount rates would you choose Project A? Project B? At what discount rate would you be indifferent between these two projects? Frnlain

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Best Match Question:

Projects A and B are mutually exclusive and have an initial cost of $82,000 each. Project A provides cash inflows of $34,000 a year for three years while Project B produces a cash inflow of $115,000 in Year 3. Which project(s) should be accepted if the discount rate is 11.7 percent? What if the discount rate is 13.5 percent? A) Accept A at both discount rates B) Accept A at 11.7 percent and neither at 13.5 percent C Accept B at both discount rates D) Accept both at 11.7 percent and neither at 13.5 percent E) Accept B at 11.7 percent and neither at 13.5 percent

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a. What is the IRR for each of these projects? If you apply the …

a. What is the IRR for each of these projects? If you apply the ...

  • Author: numerade.com

  • Rating: 4⭐ (55067 rating)

  • Highest Rate: 5⭐

  • Lowest Rate: 1⭐

  • Sumary: VIDEO ANSWER: We have to do some discounting and we are thinking about project a versus project b. We have to discount these payments because they are not equa…

  • Matching Result: If you apply the IRR decision rule, which project should the company accept? … At what discount rate would you be indifferent between these two projects?

  • Intro: SOLVED: Bumble’s Bees, Inc., has identified the following two mutually exclusive projects: a. What is the IRR for each of these projects? If you apply the IRR decision rule, which project should the company accept? Is this decision necessarily correct? b. If the required return is 11 percent, what is…
  • Source: https://www.numerade.com/ask/question/bumbles-bees-inc-has-identified-the-following-two-mutually-exclusive-projects-a-what-is-the-irr-for–12514/

Answered: Garage, Inc., has identified the… | bartleby

Answered: Garage, Inc., has identified the… | bartleby

  • Author: bartleby.com

  • Rating: 4⭐ (55067 rating)

  • Highest Rate: 5⭐

  • Lowest Rate: 1⭐

  • Sumary: Solution for Garage, Inc., has identified the following two mutually exclusive projects:   Year Cash Flow (A) Cash Flow (B) 0 -$43,500 -$43,500…

  • Matching Result: A? Project B? At what discount rate would the company be indifferent between these two projects? Explain. Question. Garage, Inc., has identified the …

  • Intro: Answered: Garage, Inc., has identified the…Garage, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$43,500 -$43,500 1 21,400 6,400 2 18,500 14,700 3 13,800 22,800 4 7,600 25,200 What is the IRR for each of these projects? Using the IRR decision rule,…
  • Source: https://www.bartleby.com/questions-and-answers/garage-inc.-has-identified-the-following-two-mutually-exclusive-projects-year-cash-flow-a-cash-flow-/dcbbb385-21c9-4e14-8fa2-5d783b1c00d2

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Frequently Asked Questions About at what discount rate would the company be indifferent between these two projects?

If you have questions that need to be answered about the topic at what discount rate would the company be indifferent between these two projects?, then this section may help you solve it.

Quizlet: At what discount rate would you not care whether you approved or rejected the project?

When the required return is 9%, the NPV is positive, so we would accept the project. When the required return is 25%, the NPV is negative, so we would reject the project. At what discount rate would you be agnostic between accepting and rejecting the project?

How do you figure out the project’s discount rate?

Step 1: Divide the present value (PV) by the value of a future cash flow (FV). Step 2: Raise the result from Step 1 to the reciprocal of the number of years (n). Step 3: Subtract one from the value to determine the discount rate.

What is an appropriate project discount rate?

Setting a Rate Let’s say your cost of capital for average-risk projects is 10%; if you think a project is slightly riskier, you might increase your discount rate to b>10.5% or 11%/b>; if you think a project is significantly riskier, you might increase it to 16% or more.

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How can you determine a company’s discount rate?

There are two main formulas for calculating the discount rate: weighted average cost of capital (WACC) and adjusted present value (APV). WACC is the weighted average cost of capital = E/V x Ce + D/V x Cd x (1-T), and APV is the adjusted present value = NPV + PV of the impact of financing

How much of a discount rate can you accept before you reject the project?

The system is worthwhile to install because the NPV is positive, or it is not worthwhile to install because the NPV is negative. The highest discount rate that can be used before rejecting the project is 11.81%.

When one project’s approval necessitates the rejection of another, how are the projects described as such?

Choosing Between Projects When deciding to accept or reject one project has no bearing on another, they are said to be independent; if accepting one project forces you to reject another, they are said to be mutually exclusive.

Why do we discount at 10%?

The discount rate allows investors and others to consider risk in an investment and set a benchmark for future investments, for instance, if an investor expects a,000 investment to generate a 10% return in a year, in that case, the discount rate for valuing this investment or comparing it to others is 10%.

What sort of discount rate is that?

For instance, 00 invested today in a savings plan with a 10% interest rate will increase to 10, meaning that 10 (the future value) is worth 00 (the present value) as of today after being discounted by the 10% rate.

Is 20% off a good deal?

To some extent, the same is true of the slightly less well-liked 33% category. Customers can calculate how much they are saving in real terms, 20% off has a nice ring to it, and it’s a good discount without being overly generous.

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