A Ltd. is considering a Project having a life of 5 year with following cash flowsProject I30,000OutflowInflowT-1T-28,0009,000T-3T-4T-59,0007,0005,000P.V. TableYear10%90920269309%35%6741.833.7947962..826.694.630500592751.683549406301579455482397350.621402315269223Calculate IRR of the above project.

IRR is the rate of return a project generates through its lifetime expressed in annual terms. It is…

Answered: A Ltd. is considering a Project having…

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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Compute the Internal Rate of Return for a project with the following cash flows: Year Cash Flow 0 ($2,000) 1 $500 2 $400 3 $400 4 $1,500 Question 7 options: 7% 40% 12% 8%
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A proposed project is estimated to have the following cash, at 9% MARR 0 $900 1 $800 a. Using 7% interest rate, indicate the NPV of the investment. b. At 20%, indicate the NPV of the investment. 2 $700 3 $600 c. What is the IRR for this investment? Write answer in percentage value, up to 2 decimal places. 4 $500 $1500 $1500 $1500 $1500 5 6 7 8
Below is information about cash flow of Project A undertaken by ZEE Limited. Required rate of return for such type of project is 15%. Years 0 1 2 3 4 5 Cash Flow in Rs. (500,000) 150,000 200,000 170,000 190,000 250,000 Calculate payback period and Net present value (NPV).
Your division is considering two projects with the following cash flows (in millions): Year 1 3 $5 $17 $10 $6 5% Project A -$25 Project B -$20 a. What are the projects' NPVs assuming that the WACC is 5%, 10%, and 15%? WACC NPV-A NPV-B WACC 10% 0 15% 2 NPV-A $10 $9 NPV-B b. What are the projects' IRRs? c. If the WACC was 10%, ad A and B were mutually exclusive projects, which project would you choose?
What is Project A's Modified Internal Rate of Return with a WACC of 7.75%? YEAR 0 1 2 3 4 CASH FLOWS Project A -$1050 675 650 Project B -$1050 360 360 360 360
The following are the cash flows of two projects: Year 0 1 2 3 4 Project A $ (220) 100 100 100 100 Project B $ (220) 120 120 120 What are the internal rates of return on projects A and B? Note: Enter your answers as a percent rounded to 2 decimal places. Project A B IRR % %
Here are the expected cash flows for three projects: Cash Flows (dollars) Year 2 Project A C Year 8 -6,588 -2,580 -6,500 Year 1 +1,375 +1,375 +2,588 +1,375 +1,375 Year 3 +3,758 +2,758 +3,750 Year 4 8 +3,750 +5,758 a. What is the payback period on each of the projects? b. If you use the payback rule with a cutoff period of 2 years, which projects will you accept? c. If you use a cutoff period of 3 years, which projects will you accept? d-1. If the opportunity cost of capital is 12%, calculate the NPV for projects A, B, and C. Note: Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. d-2. Which projects have positive NPVs? e. "Payback gives too much weight to cash flows that occur after the cutoff date." True or false? a. Payback period b. If you use the payback rule with a cutoff period of 2 years, which projects will you accept? c. If you use a cutoff period of 3 years, which projects will you accept?…
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Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 -$ 28,400 1 10,600 2345 13,300 15,200 S 12,300 -8,800 The company uses an interest rate of 8 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %

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