Amount desired at end of period $6,000 Length of time 8 years Rate 3% Compounded Semiannually On PV Table 12.3- Period used ?, Rate Used? PV factor used ? PV of amount desired at end of period ? Period used 24 Rate Used 1.5% PV factor used 0.6995 PV of amount desired at end of period $4,197 Period used 8 Rate Used 3% PV factor used 0.7894, PV of amount desired at end of period $6,728 None of the above Period used 4 Rate Used 12% PV factor used O.6830 PV of amount desired at end of period $4,098.00 Period used 16, Rate Used 1.5%, PV factor used 0.7880, PV of amount desired at end of period $4,728

Amount desired at end of period $6,000 Length of time 8 years Rate 3% Compounded Semiannually On PV Table 12.3- Period used ?, Rate Used? PV factor used ? PV of amount desired at end of period ? Period used 24 Rate Used 1.5% PV factor used 0.6995 PV of amount desired at end of period $4,197 Period used 8 Rate Used 3% PV factor used 0.7894, PV of amount desired at end of period $6,728 None of the above Period used 4 Rate Used 12% PV factor used O.6830 PV of amount desired at end of period $4,098.00 Period used 16, Rate Used 1.5%, PV factor used 0.7880, PV of amount desired at end of period $4,728

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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karan subject-Accounting
Compute the Internal Rate of Return (IRR) for the project Purchase Equipment only, given that it falls between 11% and 13%. The PV Factors for 13% are provided below YEAR PV FACTORS (13%) 1 0.8850 2 0.7831 3 0.6931 Additional Info if you need it: ProForma Income Statement Particulars Amount Amount Sales [a] 2800000 x 1.15 3,220,000 Less Cost of Goods Sold 1400000 x 1.15 =1,610,000 Less Selling & Marketing Costs 75000 x 1.15 = 86,250 Less Admin Expenses 25000 x 1.15 = 28750 Less DepreciationExps.[Unchanged] [b] 50,000 1,775,000 EBIT [a-b] [c] 1,445,000 Less Interest [d] 20,000 EBT [c-d] [d] 1,425,000 Less Income Tax at 20% [e] 285,000 Net Income [d-e] [f] 1,140,000 Dividend Pay -out 50% [f/2] [g] 570,000 Addition to Retained Earnings…
3. What if Nguyen Hospital wants to know why IRR is not being used for the investment analysis? Calculate the IRR for each project. Round the discount factor to three decimal places. Round the IRR to the nearest whole percentage value (for example, 10.6% rounds to 11% and should be entered as "11" in the answer box.) Clearlook: Goodview: Discount factor IRR 16 16 % % Why IRR is not suitable for choosing among these mutually exclusive investments. IRR does not reveal the absolute dollar contribution that each project makes
E2
Cash Flow Asset End of year Amount Appropirate Requried Retrun A 1 $5,000 18% 2 $5,000 3 $5,000 Using cell references to the given datea and the PV function, calculate the value of asset A.
NPV profiles WACC (Dollars in Millions) Plan A Plan B Project NPV Calculations: NPVA NPVB Project IRR Calculations: IRRA IRRB NPV Profiles: Discount Rates 0% 5% 10% 15% 20% 22% 25% 11.00% NPVA $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0 -$40.00 Formulas #N/A #N/A -$11.00 $2.47 $2.47 $2.47 #N/A #N/A NPVB 1 $6.39 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 2 3 $6.39 $6.39 4 $6.39 $2.47 5 6 7 $6.39 $6.39 $6.39 $2.47 $2.47 8 9 $6.39 $6.39 $2.47 $2.47 $2.47 10 $6.39 $2.47 11 $6.39 12 $6.39 13 $6.39 $2.47 $2.47 $2.47 14 $6.39 15 $6.39 $2.47 $2.47 16 $6.39 $6.39 $2.47 17 39 $2.47
Year 0 Cash Flow = +$25,000 (assume only 1 change in signs) Project IRR = 4.5% Project DR = 6.0% %3D Should the project be accepted without reviewing NPV? Why or why not? Explain
The parents of a 3-year old child decide they need to start saving for their child's college fund. They want to have $22,000 in the fund in 15 years. The fund has an APR of 3.4%. What monthly deposit is required? Round your answer to the nearest cent.
Economics The incrementai ROR analysis with MARR = 13.5% is used to determine which entertainment project offers the best economic choice. The project 3 to project 1 comparison results in Ai equal to and the decision should be taken is Machine 1 Machine 2 Machine 3 First cost, $ Annual operating cost. S Salvage value, S Life, years -5.,000 3.500 6.500 -3.200 -15.000 1,400 +1,000 +500 +900 N0 14.66%, keep project 3 to and eliminate project 1 13.76%, keep project 1 to and eliminate project 3 13.76%, keep project 3 to and eliminate project 1 14.66%, keep project 1 to and eliminate project 3
Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% return from its investments. (PV of $1, FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 Required A Required B Project A $(183,325) a. For each alternative project compute the net present value. b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose? Initial Investment $ Chart Values are Based on: i=P % 45,000 58,000 78,295 87,400 60,000 Complete this question by entering your answers in the tabs below. For each alternative project compute the net present value. Project A 183,325 Project B $(143,960)
Project X has an initial cost of $46,919, and its expected net cash inflows are $11,500 per year for 6 years. The firm has a WACC of 8 percent, and Project X's risk would be similar to that of the firm's existing assets. Calculate the discounted payback period of Project X. 5.14 years |
PV Versus Internal Rate of Return Nguyen Hospital is considering two different low-field MRI systems: the Clearlook System and the Goodview System. The projected annual revenues, annual costs, capital outlays, and project life for each system (in after-tax cash flows) are as follows: Clearlook Goodview Annual revenues $720,000 $900,000 Annual operating costs 445,000 655,000 System investment 900,000 800,000 Project life 5 years 5 years Assume that the cost of capital for the company is 8 percent. The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems. Required: 1. Calculate the NPV for the Clearlook System - $198075 2. Calculate the NPV for the Goodview System - $178285 Which MRI system would be chosen -Clearlook System 3. What if Nguyen Hospital wants to know why IRR is not being used for the investment analysis? Calculate the IRR for each project. Round the discount factor to three decimal places. Round…

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