Year O 1 2 3 4 Project A Cash Flow $10,000 00 $ 3.000.00 $4,000.00 $5,000.00 $3,000.00 Project B Cash Flow $11,000 00 $5,000.00 $4,000.00 $4,000.00 $3,000.00 Given this information, and assuming that the relevant cost of capital for both projects is 9%. determine the net present value (NPV) for the project with the highest internal rate of return (IRR).

Year O 1 2 3 4 Project A Cash Flow $10,000 00 $ 3.000.00 $4,000.00 $5,000.00 $3,000.00 Project B Cash Flow $11,000 00 $5,000.00 $4,000.00 $4,000.00 $3,000.00 Given this information, and assuming that the relevant cost of capital for both projects is 9%. determine the net present value (NPV) for the project with the highest internal rate of return (IRR).

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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What is the project's MIRR? r = 10.00% 0 Year Cash flows O a. 22.51% O b. 11.75% O c. 17.21% O d. 14.81% O e. 15.65% -$875 1 $300 2 $320 3 $340 $360
О $18.42 $16.44 Using the technique of equivalent annual cash flows and a discount rate of 7 percent, what is the value of the following project? Year CF 0 1 2 3 4 -34 20 21 22 16 Multiple Choice $9.80 $9.25
Find the value X such that the project's rate of return would be equal to 15% End of Year Cash Flow $-3,000 $1,330 X 1 2 3 $1,930 Select one: a. $760 b. $620 c. $530 d. $840
Problem 7: NPV versus IRR. Consider the following two mutually exclusive projects: Year Cash flow Cash flow (X) (Y) O 1 2 3 -9500 5800 4000 4000 PART 7A: The NPV for X is $ Answer: 2083.77 -9500 3500 5000 6000 if the required rate of return is 10%.
ch A project with an initial investment of $88000 and a profitability index of 1.239 also has an internal rate of return of 12%. The present value of net cash flows is O $71025. O $98560. O $88000. O $109032. Save for Later O Et V B 21 E 7 Attempts: 0 of 1 used Submit Answer F12
Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of return is 16%. Use this information for the next 3 questions. Year Project A Cash Flow Project B Cash Flow ($50,000) ($20,000) 15,000 6,000 15,000 6,000 3 15,000 6,000 4 13,500 5,400 13,500 5,400 6,750 5,400
nuN-ntips%253A%252F%252Flms.mheducation.com%2521 Saved the Internal Rate Net Present Project Investment Required $160,000 $44 ,323 $135,000 $42,000 $100,000 Ş35,035 $175,000 $ 38,136 (years) of Return 18% Project Value A 7 16% 20% 12 7 D 3 228 The net present values above have been computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. Required: 1. Compute the project profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, project profitability index and internal rate of return. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the project profitability index for each project. (Round your answers to 2 decimal places.) Project Project Profitability Index tv MacBook Air 80 88 F2 F3 F4 F5 F6 F7 F9 F10 @ #3 $ % & 2 4 7 8. W E T Y D J K * CO 品:
Expected Cash FlowsYear Project A Project B0 -400 -5751 95 1502 110 2003 118 2504 125 2755 140 2306 150 180a. If you were told that each project’s cost of capital was 10%, which project should be selected using the NPV criteria?
Living Colour Company has a project available with the following cash flows: Year 0 1 2 Cash Flow -$ 32,830 8,390 10,130 14,540 16,170 11,180 If the required return for the project is 9.3 percent, what is the project's NPV? sin 4 5 Multiple Choice O $27,580.00 O $5,790.94 O $14,037.83 O $12,958.00 $14,809.14
The following are the cash flows of two projects: Project B Year Project A 0 $ (235) $ (235) 115 135 115 135 115 135 115 1234O 1 2 3 4 What are the internal rates of return on projects A and B? Note: Enter your answers as a percent rounded to 2 decimal places. Project A B IRR % %
QUESTION 8 The INTERNAL RATE OF RETURN for the project shown above is: O 3.92% O 13.25 O 15.17% 9 21.22% O No IRR QUESTION 9
Q5: The table below represents two alternatives for two construction projects: Find the best alternative using the internal rate of return (IRR) method. в A alternative 20 000 15 000 Initial investment value (P) Annual revenue $ Annual maintenance 8000 6000 3000 2000 and taxes $ Payback value$ useful life (year) 6000 4000

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