Which of the following statements is CORRECT?Single choice

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Which project do you choose if the following projects are mutually exclusive projects?

Question27 Northgate Signal Systems is considering a six-year project that requires installing new communications equipment at a cost of $468,200. This cost will be depreciated straight-line to zero over the project’s life. The equipment will save the company $141,300 per year in pretax operating costs, and the equipment requires an initial investment in net working capital of $26,400. All of the net working capital will be recovered at the end of the project. At the end of the project, the communications equipment is expected to be sold for $42,000. The tax rate is 24 percent and the discount rate is 12.8 percent.What is the net present value (NPV) of this project? $27,871.08 $40,686.98 $45,580.33 $67,086.98 ResetMaximum marks: 3 Flag question undefined

MC algo 12-27 Subjective Approach And NPV Dyrdek Enterprises has equity with a market value of $11.8 million and the market value of debt is $4.05 million. The company is evaluating a new project that has more risk than the firm. As a result, the company will apply a risk adjustment factor of 2.1 percent. The new project will cost $2.40 million today and provide annual cash flows of $626,000 for the next 6 years. The company's cost of equity is 11.47 percent and the pretax cost of debt is 4.98 percent. The tax rate is 21 percent. What is the project's NPV?

Question15 A firm is considering a 4-year investment that requires an initial outlay of 120000. The expected net cash inflows are:[table] Year | Cash Flow 1 | 30,000 2 | X 3 | 40,000 4 | 45,000 [/table]The project’s internal rate of return (IRR) is 11%. To evaluate the project, the firm first calculates its base cost of capital using WACC, then adjusts it upward for project-specific risk. Capital structure and assumptions:Target capital structure: 70% equity, 30% debt Cost of equity: 10% Pre-tax cost of debt: 5% Corporate tax rate: 25% The project is riskier than average, so the firm adds a +2% risk premium to the base WACC Note: Enter all answers as numbers rounded to two decimal places. Do not use commas in your answers (e.g., write 1500 instead of 1,500). a) Calculate the project’s cost of capital. [input] %b) Using the information provided, calculate the missing Year 2 cash flow (X). $[input] (Please round to the nearest dollar)c) The project should be [select: , rejected, accepted] ResetMaximum marks: 3 Flag question undefined [select: , rejected, accepted]

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