a. The present worth of the project is $1,367. b. The internal rate of return of the project is 12.9%. c. The annual worth of the project is -$632. d. The benefit-cost ratio of the project is 1.08. e. The future worth of the project is $3.75. f. The external rate of return of the project is 15.3%. g. The present worth of the project is -$47. h. The internal rate of return of the project is 14.7%. i. The annual worth of the project is $6,775. j. The benefit-cost ratio of the project is 0.97. k. The future worth of the project is –$13,470. 1. The external rate of return of the project is 3.7%. m. For the cases (if any) in which “do nothing" was preferred, what assumption is being made about the return generated by the "uninvested" funds? n. Is it possible that the values stated in (a) and (b) were correctly calculated on the same project? If not, why? o. Is it possible that the values stated in (c) and (d) were correctly calculated on the same project? If not, why? p. What do you know must be true about the present worth for the project in (j)? q. What do you know must be true about the internal rate of return for the project in (j)?
a. The present worth of the project is $1,367. b. The internal rate of return of the project is 12.9%. c. The annual worth of the project is -$632. d. The benefit-cost ratio of the project is 1.08. e. The future worth of the project is $3.75. f. The external rate of return of the project is 15.3%. g. The present worth of the project is -$47. h. The internal rate of return of the project is 14.7%. i. The annual worth of the project is $6,775. j. The benefit-cost ratio of the project is 0.97. k. The future worth of the project is –$13,470. 1. The external rate of return of the project is 3.7%. m. For the cases (if any) in which “do nothing" was preferred, what assumption is being made about the return generated by the "uninvested" funds? n. Is it possible that the values stated in (a) and (b) were correctly calculated on the same project? If not, why? o. Is it possible that the values stated in (c) and (d) were correctly calculated on the same project? If not, why? p. What do you know must be true about the present worth for the project in (j)? q. What do you know must be true about the internal rate of return for the project in (j)?
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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GeoWorld Systems uses a subset of the following questions during the interview process for new engineers. For each of the following cases, determine if “the project” or “do nothing” is preferred. The value of MARR in each case is 14%.
Transcribed Image Text:a. The present worth of the project is $1,367.
b. The internal rate of return of the project is 12.9%.
c. The annual worth of the project is -$632.
d. The benefit-cost ratio of the project is 1.08.
e. The future worth of the project is $3.75.
f. The external rate of return of the project is 15.3%.
g. The present worth of the project is -$47.
h. The internal rate of return of the project is 14.7%.
Transcribed Image Text:i. The annual worth of the project is $6,775.
j. The benefit-cost ratio of the project is 0.97.
k. The future worth of the project is –$13,470.
1. The external rate of return of the project is 3.7%.
m. For the cases (if any) in which “do nothing" was preferred, what
assumption is being made about the return generated by the "uninvested"
funds?
n. Is it possible that the values stated in (a) and (b) were correctly calculated
on the same project? If not, why?
o. Is it possible that the values stated in (c) and (d) were correctly calculated
on the same project? If not, why?
p. What do you know must be true about the present worth for the project in
(j)?
q. What do you know must be true about the internal rate of return for the
project in (j)?
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Where do nothing was preferred what assumption is being made about the return generated by the univested funds?
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