a. What is the profitability index for the cash flows if the relevant discount rate is 12 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. What is the profitability index if the discount rate is 17 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) c. What is the profitability index if the discount rate is 25 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

a. What is the profitability index for the cash flows if the relevant discount rate is 12 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. What is the profitability index if the discount rate is 17 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) c. What is the profitability index if the discount rate is 25 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

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 fixed stream of cash flows occurring at the beginning of each period for a fixed period of time is known as: Select one: a. Ordinary annuity b. Constant annuity c. Annuity due d. Financial annuity
S Year 0 1 2 3 Cash Flow -$ 9,900 2,300 2,900 5,200 a. What is the profitability index for the cash flows if the relevant discount rate is 6 percent? Profitability index 0.949 0.967 0.875 0.893 0.921 b. What is the profitability index for the cash flows if the relevant discount rate is 16 percent? Profitability index c. What is the profitability index for the cash flows if the relevant discount rate is 23 percent?
For the intrinsic value, why is the cashflow divided by (10%-6%)?
13. Consider the following two statements: Statement 1: If nominal cash flows are used in investment appraisal, you must discount to their present values using the real cost of capital Statement 2: The nominal discount rate does not include inflation. Which one of the following combinations (true/false) relating to the above statement is correct? A. Statement 1 : True Statement 2 : True B. Statement 1 : True Statement 2 : False C. Statement 1 : False Statement 2 : False D. Statement 1 : False Statement 2 : True
You are given the following cash flows. What is the present value (t = 0) if the discount rate is 12 percent? 0 1 2 3 4 5 6 (Periods) 0 2,000 2,000 2,000 0 -2,000 -2,000 (cash flows) Select one: a. $4,289 b. $2,804 c. $2,656 d. $4,804 e. $5,302
TRUE OR FALSE. IF FALSE CORRECT THE SENTENCE. A. True OR False: Deferred Annuities are annuities that have payments that don't begin until after the end of the second period. B. Uniform gradient cash flow is a cash flow that increases by a uniform amount each period, beginning at the end of period one.
To find NPV, it requires Choices: A.none of the choices B.discount rate and estimated cash flows C.investment amount plus discount rate D.discount rate and inflation rate E.estimated cash flow and capital structure
es Consider the following cash flows: Year Cash Flow 0 -$ 29,900 1 13,800 2 3 15,100 11,500 a. What is the profitability index for the cash flows if the relevant discount rate is 8 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. b. What is the profitability index if the discount rate is 13 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. c. What is the profitability index if the discount rate is 20 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. Profitability index b. Profitability index c. Profitability index T
= 6) Find the internal rates of return on a cash flow with deposit amounts of A = A₁ = 240, B₁ 120, A₂ = 20, B₂ = 290, and withdrawal amounts of Bo at times t = 0, t = 1, t = 2, respectively. = 40, 10,
In the discounted cashflow method, the discount rate is used for the following reasons EXCEPTa. it removes the timing differences of cashflows.b. it serves as the required rate of return of the asset being valued.c. it removes the expected riskiness of differing assetsd. it equalizes cash inflows to cash outflows so that the value would equal to the market value.
Which of the following are problems in using net present value to appraise an investment?1. The difficulty of estimating future cash flows2. The difficulty of selecting an appropriate discount rate3. It does not take account of inflation.4. The concept of net present value is difficult for non-accountants to understand. 1, 2, 3 and 4 1 and 2 only 1, 2 and 3 only 1, 2 and 4 only
You are given the following cash flows. What is the present value (t = 0) if the discount rate is 12 percent? 0 1 2 3 4 5 6 (Periods) 0 2,000 2,000 2,000 0 -2,000 -2,000 (cash flows) a. $4,804 b. $4,289 c. $5,302 d. $2,804 e. $2,656

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