All techniques Rieger International is evaluating the feasibility of investing$91,000in a piece of equipment that has a 5-yearlife. The firm has estimated the cash inflows associated with the proposal as shown in the following table: The firm has a cost of capital of 8%. a. The payback period of the proposed investment is ____years.(Round to two decimal places.) b. Calculate the discounted cash flows for the proposed investment in the following table. (Round to the nearest cent.) The discounted payback period of the proposed investment is ____years.(Round to two decimal places.) c. The NPV of the proposed investment is _____(Round to the nearest cent.) d. The probability index of the proposed investment is ____(Round to two decimal places.) e. The IRR of the proposed investment is ____% (Round to two decimal places.) f. The MIRR of the proposed investment is _____%(Round to two decimal places.) g. Should Rieger International accept or reject the proposed investment?
All techniques Rieger International is evaluating the feasibility of investing$91,000in a piece of equipment that has a 5-yearlife. The firm has estimated the cash inflows associated with the proposal as shown in the following table: The firm has a cost of capital of 8%. a. The payback period of the proposed investment is ____years.(Round to two decimal places.) b. Calculate the discounted cash flows for the proposed investment in the following table. (Round to the nearest cent.) The discounted payback period of the proposed investment is ____years.(Round to two decimal places.) c. The NPV of the proposed investment is _____(Round to the nearest cent.) d. The probability index of the proposed investment is ____(Round to two decimal places.) e. The IRR of the proposed investment is ____% (Round to two decimal places.) f. The MIRR of the proposed investment is _____%(Round to two decimal places.) g. Should Rieger International accept or reject the proposed investment?
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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Question
All techniques Rieger International is evaluating the feasibility of investing$91,000in a piece of equipment that has a
The firm has a cost of capital of 8%.
5-yearlife. The firm has estimated the cash inflows associated with the proposal as shown in the following table:
a. The payback period of the proposed investment is ____years.(Round to two decimal places.)
b. Calculate the discounted cash flows for the proposed investment in the following table. (Round to the nearest cent.)
The discounted payback period of the proposed investment is ____years.(Round to two decimal places.)
c. The
d. The probability index of the proposed investment is ____(Round to two decimal places.)
e. The
f. The MIRR of the proposed investment is _____%(Round to two decimal places.)
g. Should Rieger International accept or reject the proposed investment?
Transcribed Image Text:All techniques Rieger International is evaluating the feasibility of investing $91,000 in a piece of equipment that has a
5-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following table:
The firm has a cost of capital of 8%.
a. Calculate the payback period for the proposed investment.
b. Calculate the discounted payback period for the proposed investment.
c. Calculate the net present value (NPV) for the proposed investment.
d. Calculate the probability index for the proposed investment.
e. Calculate the internal rate of return (IRR) for the proposed investment.
f. Calculate the modified internal rate of return (MIRR) for the proposed investment.
g. Evaluate the acceptability of the proposed investment using NPV, IRR, and MIRR.
a
Data table
(Click on the icon here in order to copy the contents of the data table below
into a spreadsheet.)
Year (t)
1
W N
2
3
4
5
Cash inflows (CFt)
$20,000
$30,000
$35,000
$20,000
$40,000
X
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