Management of Wildhorse Measures, Inc., is evaluating two independent projects. The company uses a 10.8 percent discount rate for such projects. The costs and cash flows for the projects are shown in the following table. Year Project 1 Project 2 0 - $8,725,375 -$12,004,147 1 2,913,790 2,073,130 2 1,897,590 3,504,990 3 1,455,000 3,349,180 4 1,137,000 3,776,400 5 1,249,380 4,134,080 6 1,594,740 7 1,304,690 a. What are the IRRs for the projects? (Round answers to 3 decimal places, e.g. 15.257%.) The IRR of Project 1 is %, and the IRR of Project 2 is %. b. Does the IRR criterion indicate a different decision than the NPV criterion?

Carla Vista Industries is expanding its product line and its production capacity. The costs and expected cash flows of the two independent projects are given in the following table. The firm uses a discount rate of 12.38 percent for such projects. Year Product Line Expansion 0 1 2 3 4 5 -$2,803,700 8,551,900 952,200 952,200 952,200 952,200 Production Capacity Expansion NPV of product line expansion is NPV of production capacity expansion is $ -$8,666,000 LA 1,924,100 1,924,100 a. What are the NPVs of the two projects? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to O decimal places, e.g. 1,525.) 1,924,100 4,548,500 4,548,500 1

Cullumber Corp. management is evaluating two independent projects. The costs and expected cash flows are given in the following table. The cost of capital is 13.73 percent. Year 0 1 2 3 4 5 Project A - $287,839 109,300 109,300 109,300 109,300 109,300 Project B - $401,058 The NPV of project A is $ There is The IRR of Project A is a. Calculate the projects' NPV. (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.) 138,190 Cullumber should choose 162,830 b. Calculate the projects' IRR. (Round answer to 2 decimal places, e.g. 15.25%.) Cullumber should choose 179,500 118,800 119,800 c. Which project should be chosen based on NPV? Based on IRR? Is there a conflict? and project B is $ % and Project B is will be accepted. ◆ based on NPV. based on IRR. between the NPV and IRR decisions. d. If you are the decision maker for the firm, which project or projects will be…

Cullumber Industries is expanding its product line and its production capacity. The costs and expected cash flows of the two independent projects are given in the following table. The firm uses a discount rate of 14.98 percent for such projects. Year   Product Line Expansion   Production Capacity Expansion 0   -$2,426,500     -$6,756,300   1   501,800     2,381,500   2   853,000     2,381,500   3   853,000     2,381,500   4   853,000     3,975,200   5   853,000     3,975,200 a. What are the NPVs of the two projects? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.) NPV of product line expansion is   $  NPV of production capacity expansion is   $  b. Should both projects be accepted? or either? or neither? Explain your reasoning.