An IT Project with MARR=10%. If this investment is tested at i=15%, its NPV is +$4550 at i=15%; and it becomes -$760 at i=20%, what is the expected ROR or IRR? (2) jlubäi An IT Project with MARR=10%.If this investment is tested ati=15%, its NPV is +$4550 ati=15%; and it becomes -$760at i=20%, what is the?expected ROR or IRR24.28 % O17.93 % O18.54 %19.28 % O

Answered: An IT Project with MARR=10%. If this…

An IT Project with MARR=10%. If this investment is tested at i=15%, its NPV is +$4550 at i=15%; and it becomes -$760 at i=20%, what is the expected ROR or IRR?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A project has a 0.37 chance of doubling my investment in a year and 0.63 chance of halving my…

A: Return on investment (ROI) is a performance metric used to evaluate how efficiently an investment is…

Q: i need your solution wit explain...

A: FOR ANY QUERIES, PING ME HAPPY LEARNING

Q: An all-equity firm is considering the projects shown below. The T-bill rate is 5 percent and the…

A: The CAPM return represents the anticipated return on an investment and is derived from the CAPM…

Q: An investor is looking at two projects, project A and B. Project A pays $44,000 with prob. 0.7 and…

A: The objective of the question is to find the value of X, which is the payout of project B with a…

Q: Suppose the firm estimates it's wacc to be 10%. Should the wacc be used to evaluate all of its…

A: All the activities and risk that exists in an organization are shown by WACC. Its nature is…

Q: A project has two possible outcomes. The good outcome returns $8,000 next year and occurs 88% of the…

Q: Given the following variables: S = $50, E = $45, T = 1 year, r = 2 %, and P = $5; if the call option…

A: Given, Stock price (S) = $50 Strike price (E) = $45 T = 1 year r = 2% Put price (P) = $5

Q: If the IRR of a project is 10% will the MIRR be more or will it be less than 10%?

A: MIRR = [(Future Value of positive cashflows / PV of negative Cashflows)^(1/years) ]- 1

Q: You have an opportunity to invest $100,000 now in return for $79,600 in one year and $30,300 in two…

A: Given: Year Particulars Amount 0 Initial investment -$100,000 1 Cash inflows $79,600 2 Cash…

Q: Jummy Bears is trying to decide if a new product is a viable project. The initial cost in year zero…

A: Net present value(NPV) is the difference between present value of all cash inflows and present…

Q: Serenity Parts is considering a new project. They believe that the project has a beta of 2.00. The…

A: GIVEN, beta = 2rf=1.5%rm=12%

Q: Suppose you have a project that will cost $800,000 last for ten years. The cash flows foreach year…

A: With Monte Carlo Simulation, there really is no single answer for NPV and IRR.Explanation:Moreover,…

Q: A company has a project with initial investment is $40,000. It will generate $15,000 annually for…

A: Financial statements are statements which states the business activities performed by the company .…

Q: Cheng Inc. is considering a capital budgeting project that has an expected return of 43% and a…

A: Given:Expected return (E[R]) = 43%Standard deviation (σ) = 30%

Q: You estimate that a planned project for your company has a 0.3 chance of tripling the investment in…

A: Standard deviation = Where,Ri = returnPi = Probability.

Q: You must choose between the two projects below. What is the EMV for each? Looking at your own…

A: EMV of project is expected value of the project considering the probability situation of each…

Q: An all-equity firm is considering the projects shown below. The T-bill rate is 5 percent and the…

A: The risk-free rate is 5% and Market Risk Premium is 9%.

Q: What will be the discounting rate for a project with a 4% risk-free rate and 8% market risk premium…

A: Discounting is the factoring rate used to calculate the present value or future value of the cash…

Q: For each of the following scenarios, state whether an incremental investment analysis is required to…

A: The minimum acceptable rate of return (MARR), also known as the hurdle rate is the basis of…

Q: You are considering an investment. After a great deal of careful research you determine that the…

Q: The Everett Co. is looking a project with an outlay of $810 which will have a positive cash flow at…

A: IRR is the rate at which NPV is zero

Q: Consider the given problem. If your risk-adjusted discount rate is 18%, is this project justifiable?

A: NPV is the net current worth of cash flows that are expected to occur in the future.

Q: se that a project has a unique IRR=20%. The hurdle rate is 25%. Your boss says this means you should…

A: Introduction : A hurdle rate can be understood as the minimal rate of return demanded by a…

Q: What is the approximate expected coefficient of variation (=CV) of returns for a projected one-year…

A: Return 1 = 15%Return 2 = -5%Probability 1 = 50%Probability 2 = 50%

Q: A firm evaluates all of its projects by applying the IRR rule. If the required return is 18 percent,…

A: Required return = 18% Year Cash flow 0 -30000 1 20000 2 14000 3 11000

Q: LEI has the following investment opportunities that are average-risk projects for the firm: Project…

A: Rate of return:The “rate of return” is a crucial financial metric that represents the gain or loss…

Q: Alternative Uno has a first cost of $10,000 and annual expenses of $3000, whereas Alternative Dos…

A: Incremental analysis is a tool to evaluating best alternative among given options. To know the…

Q: A project has a beta of 1.25, the risk-free rate is 5.0%, and the market rate of return is 9.2%.…

A: Risk-free rate = 5%Market rate of return = 9.2%beta = 1.25We need to calculate the expected rate of…

Q: Suppose you considering investing $34 to earn $4.8 every year for forever. If the annual interest…

A: The difference between the current value of cash inflows and outflow of cash over a period of time…

Q: A potential investment costs $2,404. You estimate that the investment has three possible outcomes,…

A: Standard deviation measures the risk involved in earning a return from the stock. lower the risk…

Question

An IT Project with MARR=10%. If this investment is tested at i=15%, its NPV is +$4550 at i=15%; and it becomes -$760 at i=20%, what is the expected ROR or IRR?

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Pronto Email service has a beta of 0.95 and a cost of equity of 11.9 percent. The risk-free rate of return is 2.8 percent. The firm is currently considering a project that has a beta of 1.03 and a project life of 6 years. What discount rate should be assigned to this project? a. 13.33% b. 13.84% c. 12.67% d. 13.62%
A company is considering two potential projects. Project Alpha requires an investment of 1,000,000 and will return 185,464.74 per year at the end of each of the next six years. It has an IRR of α%. Project Beta requires and investment of 860,725 and will return 300,000 at the end of year one and 600,000 at the end of year two. It has an IRR of β%. Calculate α-β.
A project has two possible outcomes. The good outcome returns $9,000 next year and occurs 59% of the time. The bad outcome is total failure, retuming $0 , the rest of the time. If the risk free interest rate is 3.2% , the expected market return is 12.6% , and the project beta is 1.1 , what is the price of the project today?
A project has initial costs of $3,000 and subsequent cash inflows of $1350,275,875 and 1525 . The company's 10% cost of capital is an appropriate discount rate for this average risk project. Calculate the following: NPV IRR Profitability Index Please number/label each of your answers as shown above. Be sure to show your TVM function calculator inputs, and four decimal places.
Adam Andler Corp is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price should increase with inflation. Fixed costs will also be constant, but variable costs should rise with inflation. The project should last for 3 years. This is just one of many projects for the firm, so any losses on this project can be used to offset gains on other firm projects. What is the project's expected NPV? Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC or cost of capital Net investment cost (depreciable basis) The salvage value of its equipment No other fixed assets will be acquired for following years The company will require an increase in net working capital at the $10,000 beginning The company will liquidate all working capital at the end of the project -10,000 Units sold (constant through years) 60,000 $30.00 $50,000 $17.00 Average price per unit, Year 1 Fixed operating…
Suppose you have a project that will cost $800,000 last for ten years. The cash flows for each year have an expected value of $175,000 with a standard deviation of $20,000. The cost of capital is 10%. Use a Monte Carlo simulation with 1,000 replications to evaluate this project using the NPV and IRR approaches. USE EXCEL AND EXPLAIN EACH STEP
A project has a NPV of +60,000 dollars at the interest rate of 8%. A NPV of -30,000 dollars is realised at an interest rate of 10%. What is the IRR when calculated using the linear interpolation method? Select the best answer from the options listed below. 9.33% b. 8.67% 9% d. 9.67% a. C.