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NEW QUESTION: 1
A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below:
Years01234
S-1,1009003505010
L-1,1000300500850
The company's cost of capital is 12 percent, and it can get an unlimited amount of capital at that cost. What is the regular IRR (not MIRR) of the better project?
A. 13.88%
B. 17.46%
C. 12.53%
D. 13.09%
E. 12.00%
Answer: D
Explanation:
Explanation/Reference:
Explanation:
Time line:
0 k = 12%1234 Years
Cash flows S -1,1009003505010
NPV(S) = ? IRR(S) = ?
Cash flows L -1,1000300500850
NPV(L) = ? IRR(L) = ?
Financial calculator solution:
Calculate the NPV and IRR of each project then select the IRR of the higher NPV project Project S; Inputs:
CF(0) = -1,100; CF(1) = 900; CF(2) = 350; CF(3) = 50; CF(4) = 10; I = 12 Output: NPV(S) = 24.53; IRR(S) = 13.88%.
Project L; Inputs: CF(0) = -1,100; CF(1) = 0; CF(2) = 300; CF(3) = 500; CF(4) = 850; I = 12 Output: NPVL = 35.24; IRR(L) = 13.09%.
Project L has the higher NPV and its IRR = 13.09%.
NEW QUESTION: 2
A customer wants to buy Online Services and perpetual licenses for on-premises software through one agreement. The customer wants to add Software Assurance (SA) to some of the licenses for the on- premises products.
You need to recommend an agreement for the customer.
What should you recommend?
A. Open
B. Server and Cloud Enrollment (SCE)
C. Open Value Non-Company-wide
D. Select Plus
Answer: C
Explanation:
Explanation/Reference:
The Open Value program comes with two options Non-Company-wide & Company -wide.
The Open Value Non-company-wide option offers simplified license management for more control over your IT investment and better management of software costs with the advantages of Software Assurance.
NEW QUESTION: 3
HOTSPOT
Answer:
Explanation: