5. Project A has the net present value at a discount rate of 17% is $5,380 and at a rate of 19% the net present value is at ($2,670). What is the internal rate of return for the project? A 15.7% B 16.5% C 18.3% D 17.6%

5. Project A has the net present value at a discount rate of 17% is $5,380 and at a rate of 19% the net present value is at ($2,670). What is the internal rate of return for the project? A 15.7% B 16.5% C 18.3% D 17.6%

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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a. Calculate the net present value of the following project for discount rates of o, 50, and 100%: Co -6,750 b. What is the IRR of the project? Cash Flows ($) C₁ +4,500 C₂ +18,000
2. You are considering two mutually exclusive projects with the following cash flows. The discount rate is 7.5 percent: YEAR PROJECT N PROJECT Y - P21,000,000 - P21,000,000 1 7,200,000 8,500,000 (a) Calculate the payback period of each project. ( (b) Compute the net present value of the two projects. (c) Which project should be accepted? Justify your answer. 2 4,900,000 5,200,000 9,100,000 4,900,000 4 6,100,000 8,700,000
A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 -$ 27,000 1 23,000 14,000 8,000 a. At a required return of 25 percent, what is the NPV for this project? 2 WN 3 NPV b. At a required return of 34 percent, what is the NPV for this project? NPV
1. What is the project’s net present value? 2. What is the project’s internal rate of return to the nearest whole percent? 3. What is the project’s simple rate of return?
5. Compare the following 2 alternatives with a method of your choice. The market rate is 6% and inflation is expected to run at 2.5% per year. Alt A B Construction cost $ Benefits $/yr 450,000 380,000 2,000,000 1,500,000 Salvage 200,000 150,000 Life (yrs) 12 9
A) Consider the following two mutually exclusive projects: Cash flow (A) -RM300,000 20,000 50,000 50,000 390,000 i) ii) Year 0 1 2 3 4 Cash flow (B) -RM40,000 19,000 12,000 18,000 10,500 If you apply the payback criterion, which investment will you choose if you set the maximum payback period of 3 years? If you apply the internal rate of return (IRR) criterion, which investment will you choose, if you require a 15% return?
(c) Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%.) Annual rate of return Project Bono % Project Edge % Project Clayton %
Use the table for the question(s) below. Consider the following two projects: Year 0 Project Cash Flow A - 100 40 50 B - 73 30 30 The payback period for project A is closest to: OA. 2.0 years O B. 2.4 years C. 2.2 years O D. 2.5 years Year 1 Cash Flow Year 2 Cash Flow Year 3 Cash Flow 60 30 Year 4 Cash Flow N/A 30 Discount Rate .15 .15
6.2 (q4) A project requires an initial outlay of $150 and will result in a cash inflow of $220 in 5 years. What is the Internal Rate of Return of the project? a. 7% b. 9% c. 8% d. 6%
Given a discount rate of 12.5%, find the NPV of the 7-year project. Year Cash flow 0 -18,000 1 500 23 500 3,000 4 3,000 5 5,000 69 5,000 7 10,000
Se.126.
7. Dudley Corp. have identified a project with the following cash flows: Year 1 2 3 4 Cash Flow $ 940 1,090 1,340 1,405 If the discount rate is 8 percent, what is the future value of the cash flows in year 4? If the discount rate is 11 percent, what is the future value of the cash flows in year 4? If the discount rate is 24 percent, what is the future value of the cash flows in year 4? Do not round intermediate calculations and round your final answer to 2 decimal places.

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