• Capital budgeting
    interdependent and mutually exclusive projects is that the independent project’s cash flows are not affected by the acceptance of the other, although the mutually exclusive can be adversely impacted by the acceptance of the other. the difference between normal and no normal cash flow stream projects occurs in...
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  • Decision Making Process
    process of comparing mutually exclusive alternatives. These are the differences between alternatives, and the minimum attractive rate of return, and the do nothing alternative. Forming Mutually exclusive alternatives Engineering proposals can be independent, mutually exclusive, or contingent...
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  • Capital Budgeting
    project. Question b What is the difference between independent and mutually exclusive projects? Between normal and non-normal projects? Independent projects mean a company can select one or both of the projects as long as they meet minimum profitability. This is because the projects do not compete...
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  • Capital Budgeting
    1. 2. 3. 4. 5. Estimate CFs (inflows & outflows). Assess riskiness of CFs. Determine the appropriate cost of capital. Find NPV and/or IRR. Accept if NPV > 0 and/or IRR > WACC. 10-3 What is the difference between independent and mutually exclusive projects?   Independent projects...
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  • Capital Budgeting
    decisions? B. What is the difference between independent and mutually exclusive projects? Between projects with normal and nonnormal cash flows? C. (1) Define the term net present value (NPV). What is each project’s NPV? C. (2) What is the rationale behind the NPV method? According to...
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  • Finance Mini Case Chp11
    the difference between independent and mutually exclusive projects? An independent project is one in which accepting or rejecting one project does not affect the acceptance or rejection of other projects under consideration. No relationship exists between the cash flows of one project and...
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  • Accounting and Finance 7
    independent. If they are mutually exclusive? You would only accept Project S as it has the higher NPV of $19,984.97 versus L which has a lower NPV of $18,782.87 if the franchises are mutually exclusive. (3*)* What is the difference between the regular and discounted payback periods? The...
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  • Mr.
    Understanding Financial Management: A Practical Guide Guideline Answers to the Concept Check Questions Chapter 8 Capital Budgeting 1. What is the difference between independent and mutually exclusive projects? An independent project is one in which accepting or rejecting one project does...
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  • Capital Budgeting
    Capital Budgeting   What are the characteristics of mutually exclusive capital budgeting projects that may cause the net present value and internal rate of return methods to rank the projects differently? How would this difference impact your recommendations and/or decision-making process within...
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  • Cost of Capital, Capital Budgeting and Financial Planning
    subjective risk assessments of each franchise, and concluded that both franchises have risk characteristics that require a return of 10%. You must now determine whether one or both of the franchises should be accepted. 1. What is the difference between independent and mutually exclusive...
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  • npv and irr
    . Disadvantages: Give you conflicting answers when compared to NPV for mutually exclusive projects. Multiple IRR for non-normal cash flows (when the project operates at a loss or the company needs to contribute more capital) Conflicts between NPV and IRR Methods For an independent project that the...
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  • fundamental of budgeting
    feasibility of the project. C. Classification of Investment Projects Capital budgeting projects can be broadly classified into three types: (1) independent projects; (2) mutually exclusive projects; and (3) contingent projects. Independent Projects Projects are independent when their cash flows...
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  • Unit 8 Reading
    of the NPV approach, and it is also easy to see why both projects should be accepted if they are independent and why L should be chosen if they are mutually exclusive. Why is the NPV regarded as being the primary capital budgeting decision criterion? What’s the difference betweenindependent...
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  • Financial Management (Capital Budgeting Mini Case)
    difference between independent and mutually exclusive projects? Solution: Projects are independent if the cash flows of one are not affected by the acceptance of the other. Conversely, two projects are mutually exclusive if acceptance of one impacts adversely the cash flows of the other; that is, at...
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  • Fiance Mini-Case
    of breakeven analysis: the payback period tells us when the project will break even in a cash flow sense. With a required payback of 2 years, franchise S is acceptable, but franchise L is not. Whether the two projects are independent or mutually exclusive makes no difference in this situation...
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  • Chicago Valve
    . 2conflicts between projects can result from magnitude and timing of cash flows 3. the greater the difference between timing and size of cash flows, the more likely conflicts will arise Against: NPV= (17301) and IRR= 16.20%When projects are independent and the returns are higher than the hurdle...
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  • Essay
    both. Not Both. Independent  Taking one project does not affect the taking of another project.    Ex: If you buy machine A, you can also buy machine B, or not. Ex: Cash flows from Project A do not affect cash flows for Project B. Projects that are Not Mutually Exclusive...
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  • Rhrhyr
    IS POSITIVE), OR IF THE CALCULATED RATE OF RETURN (THE IRR) IS HIGHER THAN THE PROJECT COST OF CAPITAL, ACCEPT THE PROJECT. B. WHAT IS THE DIFFERENCE BETWEEN INDEPENDENT AND MUTUALLY EXCLUSIVE PROJECTS? BETWEEN PROJECTS WITH NORMAL AND NONNORMAL CASH FLOWS? ANSWER: [SHOW S11-4 THROUGH S11-7...
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  • Answer Key to Finance Book by Houston and Brigham | Chapter 10 | 10th Edition
    THAN THE PV OF THE OUTFLOWS (THE NPV IS POSITIVE), OR IF THE CALCULATED RATE OF RETURN (THE IRR) IS HIGHER THAN THE PROJECT COST OF CAPITAL, ACCEPT THE PROJECT. B. WHAT IS THE DIFFERENCE BETWEEN INDEPENDENT AND MUTUALLY EXCLUSIVE PROJECTS? BETWEEN PROJECTS WITH NORMAL AND NONNORMAL CASH FLOWS...
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  • Chapter Five Npv
    method, we learn what it measures, its computation, and how we use it to make decisions on independent and mutually exclusive projects. We also develop four criteria, which are based on the factors that determine value, to evaluate each capital budgeting method in the context of the objective of a firm...
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