Agape Mining Inc. is evaluating a project with the following cash flows: Year 0 1 2 3 4 5 6 7 8 o Discounted payback period o o Construct a spreadsheet and calculate the following (the required rate of return is 11%): o Payback period Internal rate of return (IRR) Modified IRR Cashflow -$380,000,000.00 $79,000,000.00 $82,000,000.00 -$53,000,000.00 $175,000,000.00 $195,000,000.00 -$40,000,000.00 $188,000,000.00 $71,000,000.00 o Net present value (NPV) . • The discounting approach The reinvestment approach The combination approach Based on your analysis, should the company take the project? Why?

Agape Mining Inc. is evaluating a project with the following cash flows: Year 0 1 2 3 4 5 6 7 8 o Discounted payback period o o Construct a spreadsheet and calculate the following (the required rate of return is 11%): o Payback period Internal rate of return (IRR) Modified IRR Cashflow -$380,000,000.00 $79,000,000.00 $82,000,000.00 -$53,000,000.00 $175,000,000.00 $195,000,000.00 -$40,000,000.00 $188,000,000.00 $71,000,000.00 o Net present value (NPV) . • The discounting approach The reinvestment approach The combination approach Based on your analysis, should the company take the project? Why?

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

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%
Consider the following two projects with cash flows in $: Project Year 0 Year 1 Year Year 3 Year 4 Discount Rate A - 100 40 50 60 n/a 0.15 B -73 30 30 30 30 0.15 For Project A, after two years, the project has been paid off for $90 out of $100. To find out the fraction of the third year, we take the $10 yet to be paid and divide it by $60, which is $10/$60 = 0.167. Therefore, the payback period for Project A is 2.167 years. Following the same logic, calculate the payback period for Project B.
Yellow Day has a project with the following cash flows: YearCash Flows 0 -$27,500 1 10,800 2 22,300 3 10,020 -3,850 What is the MIRR for this project using the reinvestment approach? The interest rate is 8 percent. O 22.28% O 14.09% O 19.93% O 11.95%
MAKE SURE YOU ANSWER THIS QUESTION IN EXCEL FORMULA, NOT ALGEBRAICALLY!!!!!
Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $222,000 and would yield the following annual net cash flows. (PV of $1. EV of $1. PVA of $1, and EVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 Year 2 Year 3 Totals Project C1 $ 10,000 106,000 166,000 $ 282,000 Project C2 $ 94,000 94,000 94,000 $ 282,000 a. The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 12% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Complete this question by entering your answers in the tabs below. Required A Required B The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B…
File corporation has a project available with the following cash flows Year 0,1,2,3,4
the project's net cash flow is listed as follows. Please calculate its simple payback period and discounted payback period (i=10%). End of 2 3 4 1 5 Year $12 $11 $10 $10 $9, ,00 ,00 ,00 Net -$4 Cash 2,00 ,00 00 Flow
Coffer Company is analyzing two potential investments. Project X Cost of machine Net cash flow: Year 1 Year 2 $ 85,470 Project Y $ 65,000 33,000 33,000 3,000 30,000 Year 3 Year 4 33,000 0 • 30,000 25,000 If the company is using the payback period méthod, and it requires a payback period of three years or less, which project(s) should be selected? Multiple Choice Project Y. Project X. Both X and Y are acceptable projects. Neither X nor Y is an acceptable project.
For the cash flows given below, find the ERR and evaluate the project when the external reinvestment rate is ε = 10% and MARR = 8%. EOY 0 1 23 2 3 4 5 Cash Flow -$10,000 -$2,000 $2,500 $4,000 $4,000 $4,000
Living Colour Company has a project available with the following cash flows: Year 0 1 2 Cash Flow -$ 32,830 8,390 10,130 14,540 16,170 11,180 If the required return for the project is 9.3 percent, what is the project's NPV? sin 4 5 Multiple Choice O $27,580.00 O $5,790.94 O $14,037.83 O $12,958.00 $14,809.14
6.
answer must be correct

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