Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have...

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Quantitative Problem: Bellinger Industries isconsidering two projects for inclusion in its capital budget, andyou have been asked to do the analysis. Both projects' after-taxcash flows are shown on the time line below. Depreciation, salvagevalues, net operating working capital requirements, and tax effectsare all included in these cash flows. Both projects have 4-yearlives, and they have risk characteristics similar to the firm'saverage project. Bellinger's WACC is 10%.
0 1 2 3 4
Project A -1,020 660 375 260 310
Project B -1,020 260 310 410 760
What is Project A's NPV? Round your answer to the nearest cent.Do not round your intermediate calculations.

$
What is Project B's NPV? Round your answer to the nearest cent.Do not round your intermediate calculations.

$
If the projects were independent, which project(s) would beaccepted?

If the projects were mutually exclusive, which project(s) would beaccepted?

Answer & Explanation Solved by verified expert

4.4 Ratings (972 Votes)

Project A Net present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 1020 It is entered with a negative sign since it is a cash outflow Cash flow for all the years should be entered Press Enter and down arrow after inputting each See Answer

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Quantitative Problem: Bellinger Industries isconsidering two projects for inclusion in its capital budget, andyou have been asked to do the analysis. Both projects' after-taxcash flows are shown on the time line below. Depreciation, salvagevalues, net operating working capital requirements, and tax effectsare all included in these cash flows. Both projects have 4-yearlives, and they have risk characteristics similar to the firm'saverage project. Bellinger's WACC is 10%.01234Project A-1,020660375260310Project B-1,020260310410760What is Project A's NPV? Round your answer to the nearest cent.Do not round your intermediate calculations.$What is Project B's NPV? Round your answer to the nearest cent.Do not round your intermediate calculations.$If the projects were independent, which project(s) would beaccepted?If the projects were mutually exclusive, which project(s) would beaccepted?