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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Blinding Light Company has a project available with the following cash flows: Year Cash Flow -$ 32,990 072345 8,360 10,090 14,470 16,130 11,120 What is the project's IRR?
Belgravia Petroleum Inc. is trying to evaluate a generation project with the following cash flows: Year Cashflow 0 -$300,000,000 1 2 3 4 5 6 7 8 $63,000,000 $85,000,000 -$50,000,000 $154,000,000 $157,000,000 -$50,000,000 $70,000,000 $72,000,000 - Construct a spreadsheet and calculate the following (the required rate of return is 7%): o Payback period o Discounted payback period o Net present value (NPV) o Modified IRR The discounting approach ▪ The reinvestment approach . The combination approach Based on your analysis, should the company take the project? Why?
The following are a project's cash flows. What is the projects year - 110155450 cash flows - 9.70% 5. 14.660%. 8.64% 10.78% . =. 16.94% IBR? $450 $40 3 8490
The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash flows. Consider the case of Blue Llama Mining Company: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $850,000. Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR method for capital budgeting decisions. The CFO says that the IRR is a better method because returns in percentage form are easier to understand and compare to required returns. Blue Llama Mining Company's WACC is 8%, and project Sigma has the same risk as the firm's average project.
PharmPic is considering the following project with the following cash flows: PharmPic Project Period Cash Flow 0 -$50,000 1 -$7,000 2 -$40,000 3 $10,000 4 $5,000 5 $20,000 6 $25,000 7 $32,000 8 $37,000 DosageDoc is considering the following project with the following cash flows: DosageDoc Project Period Cash Flow 0 -$50,000 1 70,000 2 -40,000 3 30,000 4 -7,000 PharmPic Project’s cash flows are semi-annually. PharmPic has the following two financing choices; loan with an APR of 6.5% compounding semi-annually or a loan with an APR of…
The following information is provided by Doppler Systems: Project A Project B Project C Project D Initial investment $440,000 $202,000 $550,000 $506,000 PV of cash inflows $570,000 $394,000 $816,000 $406,000 Payback period (years) 3.6 3.2 4.0 20 NPV of project $130,000 $192,000 $266,000 $100,000 Calculate the profitability index for Project A. (Round your answer to two decimal places.) 1.09 1.67 0.85 1.30
Filter Corp. has a project available with the following cash flows: TT Year Cash Flow -$13,800 6,700 8,000 3,900 3,500 1 2 3 4 What is the project's IRR? Multiple Cholce 29.76% 25.51% 28.34% 26.57% 27.63%
Millano Company is considering a project that has the following cash flow data. What is the project's IRR? Year 0 1 2 3 Cash flows −$123,400 $36,200 $54,800 $48,100 a. 5.96% b. 6.04% c. 6.09% d. 5.93% e. 6.13%
A company has a project available with the following cash flows: Year 0 1 2 3 4 Cash Flow -$ 35,990 12,570 14,740 19,660 11,000 If the required return for the project is 7.9 percent, what is the project's NPV? Multiple Choice $21,980.00 $11,078.65 $3,970.46 $12,085.80 $13,812.35
Belgravia Petroleum Inc. is trying to evaluate a generation project with the following cash flows: Year Cashflow 0 -$300,000,000 1 $63,000,000 2 $85,000,000 3 -$50,000,000 4 $145,000,000 5 $175,000,000 6 -$50,000,000 7 $70,000,000 8 $72,000,000 Construct a spreadsheet and calculate the following (the required rate of return is 12%): Payback period Discounted payback period Internal rate of return (IRR) Modified IRR The discounting approach The reinvestment approach The combination approach Net present value (NPV) Based on your analysis, should the company take the project? Why?
A company is evaluating three possible investments. The following information is provided by the company: Project A Project B Project C Investment $238,000 $54,000 $238,000 Residual value 0 30,000 40,000 Net cash inflows: Year 1 70,000 30,000 100,000 Year 2 70,000 21,000 70,000 Year 3 70,000 17,000 80,000 Year 4 70,000 14,000 40,000 Year 5 70,000 0 0 What is the payback period for Project A? (Assume that the company uses the straight−line depreciation method.) (Round your answer to two decimal places.) A. 1.8 years B. 2.4 years C. 5.00 years D. 3.4 years
Watts Co. is considering a project that has the following cash flow and WACC data. What is the project's terminal value of cash inflows? WACC: 10.00% Year Cash flows O $1,520.50 O $1,260.75 O $1,660.00 O $1,320.00 O $1,475.25 0 1 -$850 $300 2 $320 3 $340 4 $360

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