• 100% Satisfaction Guarantee

Manal Elkhoshkhany, Bachelor's Degree
Category: Multiple Problems
Satisfied Customers: 9570
Experience:  Completed by BA degree in 1988 and graduated with a GPA of 4.0
3708793
Type Your Multiple Problems Question Here...
Manal Elkhoshkhany is online now

# Noe Drilling Inc. is considering Projects S and L, whose cash

### Resolved Question:

Noe Drilling Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO believes the IRR is the best selection criterion, while the CFO advocates the MIRR. If the decision is made by choosing the project with the higher IRR rather than the one with the higher MIRR, how much, if any, value will be forgone. In other words, what's the NPV of the chosen project versus the maximum possible NPV? Note that (1) "true value" is measured by NPV, and (2) under some conditions the choice of IRR vs. MIRR will have no effect on the value lost.

WACC: 7.00%
Year 0 1 2 3 4
CFS -\$1,100 \$550 \$600 \$100 \$ 100
CFL -\$2,750 \$725 \$725 \$800 \$1,400

\$197.01
\$208.11
\$219.22
\$230.32
.
2 points
Question 2

The relative risk of a proposed project is best accounted for by which of the following procedures?
Answer Adjusting the discount rate upward if the project is judged to have above-average risk.
Adjusting the discount rate downward if the project is judged to have above-average risk.
Reducing the NPV by 10% for risky projects.
Picking a risk factor equal to the average discount rate.
Ignoring risk because project risk cannot be measured accurately.
.
2 points
Question 3

Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?

WACC: 10.00%
Year 0 1 2 3 4
Cash flows -\$950 \$525 \$485 \$445 \$405

1.79 years
1.99 years
2.22 years
2.44 years
.
2 points
Question 4

Which of the following statements is CORRECT?
Answer An NPV profile graph shows how a project's payback varies as the cost of capital changes.
The NPV profile graph for a normal project will generally have a positive (upward) slope as the life of the project increases.
An NPV profile graph is designed to give decision makers an idea about how a project's risk varies with its life.
An NPV profile graph is designed to give decision makers an idea about how a project's contribution to the firm's value varies with the cost of capital.
We cannot draw a project's NPV profile unless we know the appropriate WACC for use in evaluating the project's NPV.
.
2 points
Question 5

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.
Answer If Project A has a higher IRR than Project B, then Project A must have the lower NPV.
If Project A has a higher IRR than Project B, then Project A must also have a higher NPV.
The IRR calculation implicitly assumes that all cash flows are reinvested at the WACC.
The IRR calculation implicitly assumes that cash flows are withdrawn from the business rather than being reinvested in the business.
If a project has normal cash flows and its IRR exceeds its WACC, then the project's NPV must be positive.
.
2 points
Question 6

Dalrymple Inc. is considering production of a new product. In evaluating whether to go ahead with the project, which of the following items should NOT be explicitly considered when cash flows are estimated?
Answer The company will produce the new product in a vacant building that was used to produce another product until last year. The building could be sold, leased to another company, or used in the future to produce another of the firm's products.
The project will utilize some equipment the company currently owns but is not now using. A used equipment dealer has offered to buy the equipment.
The company has spent and expensed for tax purposes \$3 million on research related to the new detergent. These funds cannot be recovered, but the research may benefit other projects that might be proposed in the future.
The new product will cut into sales of some of the firm's other products.
If the project is accepted, the company must invest \$2 million in working capital. However, all of these funds will be recovered at the end of the project's life.
.
2 points
Question 7

Tuttle Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that if a project's expected NPV is negative, it should be rejected.

WACC: 11.00%
Year 0 1 2 3 4
Cash flows -\$1,000 \$350 \$350 \$350 \$350

\$81.56
\$85.86
\$90.15
\$94.66
.
2 points
Question 8

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one cash outflow at t = 0 followed by a series of positive cash flows.
Answer A project's MIRR is always greater than its regular IRR.
A project's MIRR is always less than its regular IRR.
If a project's IRR is greater than its WACC, then its MIRR will be greater than the IRR.
To find a project's MIRR
Submitted: 2 years ago.
Category: Multiple Problems
Expert:  Manal Elkhoshkhany replied 2 years ago.

Hello

Do you need to show calculations?

Customer: replied 2 years ago.
No . I just need the answers .thanks
Customer: replied 2 years ago.
Please send me an email when you are done .do you have my email address? Thanks
Expert:  Manal Elkhoshkhany replied 2 years ago.

No :) We cannot exchange emails with students :) It is against the policy.

If you have any questions, please do not hesitate to ask; if all is clear, please rate the solution as experts do not get paid unless you rate the solution.

https://www.box.com/s/sc5lwpstksavhpmoifdo

P.S. If you like my services, please feel free to direct your future posts to me specifically by typing "For BusinessTutor" at the beginning of your post. Should you choose to do this, please try to allow me 48 hours before the deadline. If you need to meet me online for a timed assignment, please advise me of the date and time (EST) you want me to meet you here and I will.
Please make sure you take the length (and number) of the questions into consideration when making your offer to avoid delays in providing solutions.

Thank you

Manal Elkhoshkhany, Bachelor's Degree
Satisfied Customers: 9570
Experience: Completed by BA degree in 1988 and graduated with a GPA of 4.0

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

### What Customers are Saying:

• Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
< Last | Next >
• Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
• This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
• Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
• I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin Kernersville, NC
• Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther Woodstock, NY
• Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know. Robin Elkton, Maryland
• He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here. Diane Dallas, TX

• ### linda_us

#### Satisfied Customers:

1301
Business Analyst and Solution Consultant with over 9 years of experience.
< Last | Next >

### linda_us

#### Satisfied Customers:

1301
Business Analyst and Solution Consultant with over 9 years of experience.

### Mr. Gregory White

#### Satisfied Customers:

839
M.A., M.S. Education / Educational Administration

### FiveStarLaw

#### Satisfied Customers:

725
Lawyer, Accountant and Researcher

### Manal Elkhoshkhany

#### Satisfied Customers:

710
Completed by BA degree in 1988 and graduated with a GPA of 4.0

### F. Naz

#### Satisfied Customers:

626
have completed B.Com and CA Finalist

### Bizhelp

#### Satisfied Customers:

489
BA degree and Certified Public Accountant

152