A firm is considering two mutually exclusive projects, & alia 1, 4 0 1 2 3 -$1,000 $110 $320 $370 $650 Project X Project Y -$1,000 $1,000 $110 $50 $45 The projects are equally risky, and their WACC is 10%. What is the MIRR of the project that maximizes shareholder value? Do not round intermediate calculations. Round your answer to two decimal places.

A firm is considering two mutually exclusive projects, & alia 1, 4 0 1 2 3 -$1,000 $110 $320 $370 $650 Project X Project Y -$1,000 $1,000 $110 $50 $45 The projects are equally risky, and their WACC is 10%. What is the MIRR of the project that maximizes shareholder value? Do not round intermediate calculations. Round your answer to two decimal places.

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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Similar questions

A risky $420,000 investment is expected to generate the following cash flows: Year 1 2 3 4$ 102,700 $ 163,030 $ 160,824 $ 135,200 If the firm’s cost of capital is 12 percent, should the investment be made?. Use a minus sign to enter a negative value, if any. Round your answer to the nearest dollar.NPV: $ Should The investment be made? An alternative use for the $420,000 is a four-year U.S. Treasury bond that pays $25,200 annually and repays the $420,000 at maturity. Management believes that the cash inflows from the risky investment are equivalent to only 70 percent of the certain investment, which pays 6 percent. Should the investment be made? Use Appendix B to answer the question. Do not round other intermediate calculations. NPV: $ Should The investment be made?
XYZ Corporation evaluates two projects. Projects x and y; the below table shows their cash flows. These projects are mutually exclusive, equally risky and are not repeatable. If the decision is made by choosing the Project with the higher IRR, how much value will be forgone? Wacc %8 0 1 2 3 4 CF(X) ($1,050) $675 $650 CF(Y) ($1,050) $360 $360 $360 $360 a. IRR of Project X: %.......... b. IRR of Project Y: %.......... c. NPV of Project X: $............ d. NPV of Project Y: $............ e. The Value forgone: $..............
A firm has two mutually exclusive investment projects to evaluate. The projects have the following cash flows: TimeAfter-tax Cash Flow XAfter-tax Cash Flow Y -$100,000 30,000 55,000 65,000 0 1 2 3 4 -$80,000 30,000 30,000 30,000 30,000 5,000 Projects X and Y are equally risky and may be repeated indefinitely. If the firm's WACC is 10%, what is the EAA of the project that adds the most value to the firm? Do not round. intermediate calculations. Round your answer to the nearest dollar. Choose Project -Select-, whose EAA = $
3. Lopez Industries has identified the following two mutually exclusive capital investment projects: Year Project A Project B 0 1 2 3 4 -16000 400 800 13000 -15500 12500 8000 800 14000 800 What is the IRR for each of these projects? If you apply the IRR decision rule, which project should the company accept? Is this decision necessarily correct? If the required return is 11%, what is the NPV for each of these projects? Which project should the firm accept if they apply the NPV rule?
A firm is considering two mutually exclusive projects, X and Y, with the following cash flows! 0 -$1,000 - $1,000 $900 1 t $90 Gjottel 3 + $430 lun 2 $280 $100 $55 The projects are equally risky, and their WACC is 13%. What is the MIRR of the project that Maximizes shareholder value? 4 Sure + $650 Project A $50 Project B
A company is considering investing in a project whose present value without flexibility is 100 million. The project pays no dividends, and the initial investment required is 102 million. The appropriate cost of capital for the project is 20%. The risk-free rate is 5%. Every period the project cash flows either go up by a factor "u", or reduces by a factor "d". Use u = 2.2255 and d% = %3D 0.4493. a) Calculate the NPV of the project without the flexibility. b) Suppose the total investment of 102 million (present value) may be disaggregated into 3 installments, as follows: 52 million in year 0, 21 million in year 1, and 33.075 million in year 2. In any year management has the option to "default" on its planned investment, at which point the project is terminated. What is the NPV for the project with this default option? c) What is the value of this default option?
A decision maker faces an uncertain venture where he/she may earn $10.000 (with a probability p) or nothing. Following mutually exclusive options to this uncertain venture are listed below. The decision maker's statements are given following each option: • A certain venture that will bring $3.000 at the end of one year. "I will invest my money to this certain venture unless there's a 50% chance of winning the $10.000" • A certain venture that will bring $5.000 at the end of one year. "I will invest my money to this certain venture unless there's a 75% chance of winning the $10.000" • A certain venture that will bring $7.000 at the end of one year. "1 will invest my money to this certain venture unless there's a 88% chance of winning the $10.000" • A certain venture that will bring $9.000 at the end of one year. "1 will invest my money to this certain venture unless there's a 97% chance of winning the $10.000" On the other hand if the utility values for $10.000 and $0 are 1 and 0.1…
39. Deyland Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC = 9%. Year 0 a. $24.71 b. $27.46 c. $30.51 d. $33.90 e. $37.29 1 2 3 4 CF, -$1,100 $375 $375 $375 $375 CF₂ $2,200 $725 $725 $725 $725
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 9.25% CFS CFL 1 2 3 4 -$1,200 $405 $405 $405 $405 -$2,400 $780 $780 $780 $780 0 a. $0.00 b. $210.59 c. $120.02 d. $8.26 e. $7.56
The following table gives the available projects (in $millions) for a firm. A 96 146 B C D 26 66 56 76 71 -16 Multiple Choice 224 If the firm has a limit of $234 million to invest, what is the maximum NPV the company can obtain? 307 331 E 156 36 383 F G 46 26 38 16 NPV Initial investment
Compute the PI static for your firm's new project if the appropriate cost of capital is 11 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Your firm's project Time 0 1 2 3 4 5 6 Cash Flow −940 170 530 680 730 230 630 Should the project be accepted or rejected?
A firm has two mutually exclusive investment projects to evaluate. The projects have the following cash flows: TimeAfter-tax Cash Flow XAfter-tax Cash Flow Y $70,000 35,000 35,000 35,000 35,000 5,000 Projects X and Y are equally risky and may be repeated indefinitely. If the firm's WACC is 11%, what is the EAA of the project that adds the most value to the firm? Do not round intermediate calculations. Round your answer to the nearest dollar. Choose Projectleid whose EAA-5 0 1 2 3 (4 5 -$80,000 40,000 $5,000 60,000

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