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Financial Forensics, Quiz 2
Two mutually exclusive projects have 3-year lives and a required rate of return of 10.5 percent. Project A costs ₹75,000 and has cash flows of ₹18,500, ₹42,900, and ₹28,600 for Years 1 to Year 3, respectively. Project B costs ₹72,000 and has cash flows of ₹22,000, ₹38,000, and ₹26,500 for Years 1 to Year 3, respectively. Using the NPV, which project, or projects, if either, should be accepted?
Two mutually exclusive projects have 3-year lives and a required rate of return of 10.5 percent. Project A costs ₹75,000 and has cash flows of ₹18,500, ₹42,900, and ₹28,600 for Years 1 to Year 3, respectively. Project B costs ₹72,000 and has cash flows of ₹22,000, ₹38,000, and ₹26,500 for Years 1 to Year 3, respectively. Using the NPV, which project, or projects, if either, should be accepted? PQR financials is a loan provider for businesses, and it is evaluating the following companies for providing a loan.\ a) Company A: Debt Equity Ratio: 0.8, Times Interest Earned: 8\ b) Company B: Debt Equity Ratio: 0.2, Times Interest Earned: 8\ c) Company C: Debt Equity Ratio: 0.8, Times Interest Earned: 2\ d) Company D: Debt Equity Ratio: 0.2, Times Interest Earned: 2\ As a financial analyst of PQR, you have to review the above information and provide a recommendation to the CEO of the company. What would be your recommendation to the CEO, regarding the best company to give the loan to? A company is having a lower PE ratio which of the following statement(s) about the company is most likely true:\ a) Statement A : The company is undervalued in the market\ b) Statement B : The company’s furfure performance look promising\ c) Statement C : The company’s furfure performance doesn’t look promising