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
#5 is the question
![A. Week 2 Assignment
d VitalSource Bookshelf: The Capita X
b My Questions | bartleby
A. Quiz: Test 1: Chapters 1 & 2
A online.vitalsource.com/#/books/9781135656232/cfi/6/22!/4/516/16/2/4/16/2@0:65.7
Copy URL
Principal payment
16,000
3. Capital Budgeting:..
Go to 3. Capital Budgeting: The
Traditional Solutions
Problems
What firms do
Investment
Perlod
Cash flows
1
2
3.
4
5
A
$(1,000)
$100
$100
$100
$100
$1,100
Working capital
В
(1,000)
264
264
264
264
264
C
(1,000)
1,611
Excluding interest payment
1. Compute the net present value for each of the following cash flow sequences. Assume a cost of money of 10 percent.
2. Compute the internal rate of return for each of the cash flows in problem 1.
3. Compute the payback for each of the cash flows in problem 1. If the maximum acceptable payback period is four years, which (if any) of the
cash flows would be accepted as a desirable investment?
4. Assume a cost of money of 5 percent. Compute the net present values of the cash flows of problem 1.
5. Assume a cost of money of 15 percent. Compute the net present values of the cash flows of problem 1. Compare with the results obtained from
problems 1 and 4.
6. The Arrow Company is considering the purchase of equipment that will return cash flows as follows:
Conclusions
Pop quiz
Review problems
End of period
Cash flows
$5,000
3,000
2,000
1,000
500
Problems
3
4
Answers to pop quiz
Solutions to review problems
Assume a cost of money of 10 percent. What is the maximum amount the company could pay for the machine and still be financially no worse
off than if it did not buy the machine?
7. a An investment with an internal rate of return of 0.25 has the following cash flows:
O Bibliography
O bob.jpg
Show all
12:17 PM
P Type here to search
Hi
10/1/2020
近
!](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2e222fd9-b0fd-41ee-8b93-d77607107c6a%2F68c3396c-fee9-41dd-93ae-c7d30404ef70%2F65a4kpy7_processed.png&w=3840&q=75)
Transcribed Image Text:A. Week 2 Assignment
d VitalSource Bookshelf: The Capita X
b My Questions | bartleby
A. Quiz: Test 1: Chapters 1 & 2
A online.vitalsource.com/#/books/9781135656232/cfi/6/22!/4/516/16/2/4/16/2@0:65.7
Copy URL
Principal payment
16,000
3. Capital Budgeting:..
Go to 3. Capital Budgeting: The
Traditional Solutions
Problems
What firms do
Investment
Perlod
Cash flows
1
2
3.
4
5
A
$(1,000)
$100
$100
$100
$100
$1,100
Working capital
В
(1,000)
264
264
264
264
264
C
(1,000)
1,611
Excluding interest payment
1. Compute the net present value for each of the following cash flow sequences. Assume a cost of money of 10 percent.
2. Compute the internal rate of return for each of the cash flows in problem 1.
3. Compute the payback for each of the cash flows in problem 1. If the maximum acceptable payback period is four years, which (if any) of the
cash flows would be accepted as a desirable investment?
4. Assume a cost of money of 5 percent. Compute the net present values of the cash flows of problem 1.
5. Assume a cost of money of 15 percent. Compute the net present values of the cash flows of problem 1. Compare with the results obtained from
problems 1 and 4.
6. The Arrow Company is considering the purchase of equipment that will return cash flows as follows:
Conclusions
Pop quiz
Review problems
End of period
Cash flows
$5,000
3,000
2,000
1,000
500
Problems
3
4
Answers to pop quiz
Solutions to review problems
Assume a cost of money of 10 percent. What is the maximum amount the company could pay for the machine and still be financially no worse
off than if it did not buy the machine?
7. a An investment with an internal rate of return of 0.25 has the following cash flows:
O Bibliography
O bob.jpg
Show all
12:17 PM
P Type here to search
Hi
10/1/2020
近
!
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