### Evaluating Projects Using the IRR RuleA firm evaluates all of its projects by applying the Internal Rate of Return (IRR) rule. A project under consideration has the following cash flows:| Year | Cash Flow ||------|------------|| 0 | -$41,000 || 1 | $20,000 || 2 | $23,000 || 3 | $14,000 |**Calculation Requirement:**If the required return is 14 percent, what is the IRR for this project? **Instructions for Calculation:**1. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places (e.g., 32.16). 2. Enter the computed IRR in the blue box provided.**IRR:**[__________] %Once you have determined the IRR, compare it to the required return of 14 percent to decide whether the firm should accept the project.Should the firm accept the project?- [ ] Accept- [ ] RejectThis exercise helps to understand the decision-making process in capital budgeting by evaluating whether the IRR exceeds the required rate of return, indicating that the project is expected to generate value for the firm.

Internal Rate of Return: The internal rate of return (IRR) is a discounting cash flow technique…

A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow -$ 41,000 20,000 23,000 14,000 0. 2. 3. If the required return is 14 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR Should the firm accept the project? O Accept O Reject

A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow -$ 41,000 20,000 23,000 14,000 0. 2. 3. If the required return is 14 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR Should the firm accept the project? O Accept O Reject

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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Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 −$ 15,200 1 6,300 2 7,500 3 7,100 4 5,900 5 −3,300 The company uses an interest rate of 12 percent on all of its projects. Calculate the MIRR of the project using all three methods. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
Marielle Machinery Works forecasts the following cash flows for a project under consideration. It uses the Internal rate of return rule to accept or reject projects. C₁ Co -$ 10,000 C₂ +$ 7,500 IRR a. What is the project's IRR? Note: Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. C3 +$ 8,500 22.41 % b. Should this project be accepted if the required return is 12%? Yes No
Typed and correct answer please. I ll rate
Compute the payback period statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown in the chart if the maximum allowable payback is four years. year 0-(-$1,450) Year 1-$250 Year 2-$380 Year 3-$620 Year 4-$1,000 Year 5-$100
Please do not provide solution in image format and give proper explanation.
Please answer the following questions using the information below: NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected? Consider the following cash flows: Year 0 1 2 3 4 5 6 Cash Flow -$8,000 $3,000 $3,600 $2,700 $2,500 $2,100 $1,600 Payback. The company requires all projects to payback within 3 years. Calculate the payback period. Should it be accepted or rejected? Discounted Payback. Calculate the discounted payback using a discount rate of 10%. Should it be accepted or rejected? IRR. Calculate the IRR for this project. The company’s required rate of return is 10%. Should it be accepted or rejected? NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?…
please answer both questions correctly: 10. A project has the following cash flows: Year Cash Flow 0 $ 43,500 1 −22,500 2 −33,500 a. What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the NPV of this project, if the required return is 12 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the NPV of the project if the required return is 0 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the NPV of the project if the required return is 24 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 11. Anderson International Limited is…
Which of the following describes the NPV decision rule? Accept if the cost of the project is recouped within 3 years. Accept if the PV of the cash inflows of the project divided by the absolute value of the cost of the project is greater than one. Accept if the PV of the cash inflows from the project minus the cost of the project is greater than zero Accept if the average net income from the project divided by the average book value is greater than the target required Accept if the rate of return earned on the project is greater than the required return for the project.
A company is considering three alternative investment projects with different net cash flows. The present value of net cash flows is calculated using Excel and the results follow. Potential Projects Present value of net cash flows (excluding initial investment) Initial investment Project A $ 11,226 (10,000) Project B $ 10,568 (10,000) a. Compute the net present value of each project. b. If the company accepts all positive net present value projects, which of these will it accept? c. If the company can choose only one project, which will it choose on the basis of net present value? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the net present value of each project. Potential Projects Project A Project B Project C Present value of net cash flows Initial investment Net present value $ $ $
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A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year 0 1 2 3 NPV Cash Flow -$ 28,600 12,600 What is the NPV for the project if the required return is 11 percent? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV At a required return of 11 percent, should the firm accept this project? O No 15,600 11,600 Yes What is the NPV for the project if the required return is 25 percent? (A negative answer should be Indicated by a minus sign. Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At a required return of 25 percent, should the firm accept this project? O Yes O NO
A potential project provides the following: Initial Investment = 36,101 Annual cash Flows = 12,101 period= 5 years What is the discount rate If NPV = 0? Answer in the format: #0.00 Answer as a percentage but without the % sign Example 0 0651 is entered as 6.51 Do not round intermediary calculations. Use full precision of your calculator or Excel. Do not include commas or dollar signs. Round properly to two decimal places Example: .157835 would be .16 Example: 2.3491 would be entered 2.35 HINT: Be sure your answer is percentage

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