000 1000 750 -750 250 250 1000 -750 250
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 1CMA
Related questions
Question
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![Suppose you derived the following information on the Private cash flows of a farming project.
Year
0
1
2
3
4
5
Market Cash Flow Before
Financing
-3500
3000
1000 1000
-750 -750
1000 1000 1000
-750 -750 -750
Debt Financing
Private Net Benefit After
Financing
-500
250
250
250
250
250
If the debt-to-equity ratio is 40:60, complete the following:
The IRR on the Market is:
The IRR on the Debt is:
The IRR on Equity is:
Provide your answers in percentage form (e.g. an interest of 5.2% should be entered as 5.20) to two decimal places. Do not include %. Marks will not be awarded if your answer is not to the correct two
decimal places. Ensure you double check your Excel output to report as 2dp.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F901df299-20da-43a2-931e-18e3316b9a2d%2F8da421cc-b73a-4599-83b6-38e31b3ef58f%2F5i1srcj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose you derived the following information on the Private cash flows of a farming project.
Year
0
1
2
3
4
5
Market Cash Flow Before
Financing
-3500
3000
1000 1000
-750 -750
1000 1000 1000
-750 -750 -750
Debt Financing
Private Net Benefit After
Financing
-500
250
250
250
250
250
If the debt-to-equity ratio is 40:60, complete the following:
The IRR on the Market is:
The IRR on the Debt is:
The IRR on Equity is:
Provide your answers in percentage form (e.g. an interest of 5.2% should be entered as 5.20) to two decimal places. Do not include %. Marks will not be awarded if your answer is not to the correct two
decimal places. Ensure you double check your Excel output to report as 2dp.
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