Current Attempt in Progress4.Management of Ivanhoe Measures, Inc., is evaluating two independent projects. The company uses a 13.00 percent discount rate forsuch projects. The costs and cash flows for the projects are shown in the following table.YearProject 1Project 20-$9,242,840-$12,271,20013,483,4002,301,33021,808,2903,908,80031,297,6003,003,09041,168,9004,434,31051,271,3804,140,78061,693,94071,479,290What are their NPVS? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediatecalculations and final answer to O decimal places, e.g. 1,525.)The NPV of Project 1 is $, and the NPV of Project 2 is $eTextbook and MediaSave for LaterUsing multiple attempts will impact your score.20% score reduction after attempt 2SearchAttempts: 0 of 3 used Submit Answer

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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Current Attempt in Progress Sheridan Corp. management is evaluating two independent projects. The costs and expected cash flows are given in the following table. The cost of capital is 12.84 percent. Year A B 0 -$265,930 -$382,916 1 109,500 148,190 2 109,500 142,830 3 109,500 149,500 4 109,500 128,800 5 109,500 119,800 4. a. Calculate the projects' NPV. (Enter negative amounts using negative sign eg. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to O decimal places, e.g. 1,525.) The NPV of project A is $ and project B is $ b. Calculate the projects' IRR. (Round answer to 2 decimal places, e.g. 15.25%) The IRR of Project A is % and Project B is c. Which project should be chosen based on NPV? Based on IRR? Is there a conflict? Sheridan should choose There is ✓ between the NPV and IRR decisions. d. If you are the decision maker for the firm, which project or projects will be accepted? will be accepted. eTextbook and Media Search %. Attempts…
Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project? Year0 ($11,368,000)1 $2,112,5892 $3,787,5523 $3,300,6504 $4,115,8995. $ 4,556,424 Round to two decimal places. For year 0 , its initial investment .
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 29,800 012345 12,000 14,700 16,600 13,700 -10,200 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %
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…
ces Duo Corporation is evaluating a project with the following cash flows: Year 0 Cash Flow -$ 29,100 -2345 1 11,300 14,000 15,900 13,000 -9,500 The company uses a discount rate of 12 percent and a reinvestment rate of 7 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR % c. Combination approach MIRR %
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.
Management of Drake Awesomeness, Inc., is currently evaluating three projects that are independent. All three projects cost the same at $600,000. Expected cash flow streams are shown in the following table. Which projects would be accepted at a discount rate of 15.5 percent? Year Project 1 Project 2 Project 3 1 $ 245,125 2 $ 212,336 3 $ 112,500 4 $ 74,000 $ $ 380,000 $ 357,450 $ 454,223 Project 1 only O Project 2 only O Project 3 only O All three projects $ $ $ 410,000 $ 480,000
ed Duo Corporation Year 012345 is evaluating a project with the following cash flows: Cash Flow -$28,800 11.000 13,700 15.600 12.700 -9,200 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % % 4
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 9.75 percent. Year 0 1 2 3 4 5 A - $339,547 129,300 129,300 129,300 129,300 129,300 B - $411,808 The NPV of project A is $ The IRR of Project A is 168,190 142,830 179,500 128,800 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 O decimal places, e.g. 1,525.) 119,800 and project B is $ b. Calculate the projects' IRR. (Round answer to 2 decimal places, e.g. 15.25%.) % and Project B is %.
Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project? Year Project 0 (S 11,368, 000) 1 $ 2, 202, 589 2 $ 3,787, 552 3 $ 3, 300, 650 4 $ 4, 115, 899 5 $ 4, 556, 424 Round to two decimal places.
Assignment equipment, the useful life of which is four years. The net cash flows for the two projects are provided in the table below: Net Cash Flow (GH¢) Project Year 1 Year 2 Year 3 Year 4 1 2,550 2,450 1,700 1,400 1,240 1,550 2,100 3,800 end of its life. i. Find the payback period for each project. Establish the net present value for each project using discount rate of 20%. Establish the net present value for each project using discount rate of 25%. Determine the internal rate of return for each project. iii. iv. Using the payback criterion and the internal rate of return criterion advice the proprietor on the project he should undertake, giving reasons for your choice of project. V. 70

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