19. Payback Period and IRR Suppose yor happroject with a payback period the project? Suppose that the payback pericd is never. What do you know Capital Budgeting PART 5 exactly equal to the life of the project. What you know about the IRR of LO 1 LO 3 20. NPV and Discount Rates An investiment has an installed cost of $781,350. The cash flows over the four-year life of the investment are projected to be $312,615, $304,172, $245,367, and $229,431. If the discount rate is zero, what is the NPV? If the discount rate is infinite, what is the NPV? At what discount rate is the NPV equal to zero? Sketch the NPV profile for this about the IRR of the project now? LO 4 investment based on these three points. 21. NPV and Payback Period Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 10 percent LO 1 LO 4 Project G Project F Year -$298,000 -$195,000 71,600 98,400 1 86,300 94,500 81,600 123,600 72,000 166,800 64,800 187,200 Calculate the payback period for both projects. a. Calculate the NPV for both projects. b. Which project, if any, should the company accept? 22. MIRR Doak Corp. is evaluating a project with the following cash flows: c. LO 5 Year Cash Flow -$32,600 11,520 14,670 1,270 10,940 The company uses an interest rate of 10 percent on all of its projects. Calcu 4,230 late the MIRR of the project using all three methods. TERMEDIATE (Questions 23-27) 0 5 23. MIRR Suppose the com of 11 O-23 O 2 345
19. Payback Period and IRR Suppose yor happroject with a payback period the project? Suppose that the payback pericd is never. What do you know Capital Budgeting PART 5 exactly equal to the life of the project. What you know about the IRR of LO 1 LO 3 20. NPV and Discount Rates An investiment has an installed cost of $781,350. The cash flows over the four-year life of the investment are projected to be $312,615, $304,172, $245,367, and $229,431. If the discount rate is zero, what is the NPV? If the discount rate is infinite, what is the NPV? At what discount rate is the NPV equal to zero? Sketch the NPV profile for this about the IRR of the project now? LO 4 investment based on these three points. 21. NPV and Payback Period Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 10 percent LO 1 LO 4 Project G Project F Year -$298,000 -$195,000 71,600 98,400 1 86,300 94,500 81,600 123,600 72,000 166,800 64,800 187,200 Calculate the payback period for both projects. a. Calculate the NPV for both projects. b. Which project, if any, should the company accept? 22. MIRR Doak Corp. is evaluating a project with the following cash flows: c. LO 5 Year Cash Flow -$32,600 11,520 14,670 1,270 10,940 The company uses an interest rate of 10 percent on all of its projects. Calcu 4,230 late the MIRR of the project using all three methods. TERMEDIATE (Questions 23-27) 0 5 23. MIRR Suppose the com of 11 O-23 O 2 345
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
Related questions
Question
Number 21 a, b, and c
Transcribed Image Text:19. Payback Period and IRR Suppose yor happroject with a payback period
the project? Suppose that the payback pericd is never. What do you know
Capital Budgeting
PART 5
exactly equal to the life of the project. What you know about the IRR of
LO 1
LO 3
20. NPV and Discount Rates An investiment has an installed cost of $781,350.
The cash flows over the four-year life of the investment are projected to be
$312,615, $304,172, $245,367, and $229,431. If the discount rate is zero,
what is the NPV? If the discount rate is infinite, what is the NPV? At what
discount rate is the NPV equal to zero? Sketch the NPV profile for this
about the IRR of the project now?
LO 4
investment based on these three points.
21. NPV and Payback Period Kaleb Konstruction, Inc., has the following
mutually exclusive projects available. The company has historically used a
three-year cutoff for projects. The required return is 10 percent
LO 1
LO 4
Project G
Project F
Year
-$298,000
-$195,000
71,600
98,400
1
86,300
94,500
81,600
123,600
72,000
166,800
64,800
187,200
Calculate the payback period for both projects.
a.
Calculate the NPV for both projects.
b.
Which project, if any, should the company accept?
22. MIRR Doak Corp. is evaluating a project with the following cash flows:
c.
LO 5
Year
Cash Flow
-$32,600
11,520
14,670
1,270
10,940
The company uses an interest rate of 10 percent on all of its projects. Calcu
4,230
late the MIRR of the project using all three methods.
TERMEDIATE (Questions 23-27)
0 5
23. MIRR Suppose the com
of 11
O-23
O 2 345
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