Belgravia Petroleum Inc. is trying to evaluate a generation project with the following cash flows: Year ● 0 1 2 5 6 7 8 Cashflow -$300,000,000 $63,000,000 $85,000,000 -$50,000,000 $145,000,000 $175,000,000 -$50,000,000 $70,000,000 $72,000,000 Construct a spreadsheet and calculate the following (the required rate of return is 12%): O Payback period • Discounted payback period • Internal rate of return (IRR) o Modified IRR

Belgravia Petroleum Inc. is trying to evaluate a generation project with the following cash flows: Year ● 0 1 2 5 6 7 8 Cashflow -$300,000,000 $63,000,000 $85,000,000 -$50,000,000 $145,000,000 $175,000,000 -$50,000,000 $70,000,000 $72,000,000 Construct a spreadsheet and calculate the following (the required rate of return is 12%): O Payback period • Discounted payback period • Internal rate of return (IRR) o Modified IRR

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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Findell Corporation is considering two projects, A and B, and it has gathered the following estimates for the projects Project A 5 years $84,480 $64,000 Project B 5 years $57,300 $50,000 Useful life Present value of cash inflows Present value of cash outflows What is the present value index for Project A?
Darius Inc. is considering a project that has the following cash flow data. Given WACC = 10%, what is the project's NPV? Year 0 = $-100,000 Year 1 = $45,000 Year 2 = $10,000 Year 3 = $0 Year 4 = $50,000 Year 5 = $15,000 Question 2Answer a. $0 b. $2,321.10 c. $1.20 d. $-7,361.95 e. $-1,230.18 f. $-524.23
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 −$ 15,200 1 6,300 2 7,500 3 7,100 4 5,900 5 −3,300 The company uses an interest rate of 12 percent on all of its projects. Calculate the MIRR of the project using all three methods. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
our company is considering two projects, Project A and Project B. The expected cash flows from the projects are as follows: • Project A: Initial Investment = $1,000,000; Year 1 = $300,000; Year 2 = $400,000; Year 3 = $500,000 • Project B: Initial Investment = $1,500,000; Year 1 = $600,000; Year 2 = $700,000; Year 3 = $800,000 Using a discount rate of “US 10-year government bond rate today + 2%”, calculate the NPV and IRR for both projects and advise which project the company should choose. Justify your decision....
Duo Corporation is evaluating a project with the following cash flows: Year 0 Cash Flow -$ 16,600 1 7,700 2 8,900 3 4 5 8,500 7,300 -4,700 The company uses an interest rate of 11 percent on all of its projects. Calculate the MIRR of the project using all three methods. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Discounting approach Reinvestment approach % % Combination approach %
A company is considering a project that has the following cash flow data. What is the project's payback? * Year 1 2 3 Cash flowS -$750 $300 $325 $350
Rayver Cruz is considering a project that has the following cash flow and WACC data. What is the project's MIRR? WACC: 11.00% Year 1 Cash flows - $800 $350 $350 $350 9.84% O 10.94% 12.15% 13.50% 8.86%
Solve this one
Tiffany Co. is analyzing two projects for the future. Assume that only one project can be selected. Project Y Project X Cost of machine P680,000 P600,000 Net cash flow: Year 1 240,000 40,000 Year 2 240,000 260,000 Year 3 240,000 260,000 Year 4 0 200,000 If the company is using the payback period method and it requires a payback of three years or less, which project should be selected? Group of answer choices Project Y. Project Y because it has a lower initial investment. Both X and Y are acceptable projects. Project X. Neither X nor Y is an acceptable project.
Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $234,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Net cash flows Project C1 Project C2 Year 1 $ 14,000 $ 98,000 Year 2 110,000 98,000 Year 3 170,000 98,000 Totals $ 294,000 $ 294,000 a. The company requires a 10% 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 10% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question.
As the project manager, you have been asked by AstraZeneca to assess the viability of two (2) sub-projects based on their net present value (NPV). Project 1 has an initial investment of $50,000 and a net cash inflow of $27,000 for a period of2 years.Project 2 has an initial investment of $150,000 and a net cash inflow of $59,000 in year 1and $120,000 in year 2.The discount rate to be used is 5% base on the information which project should be selected and why?
Profitability index. Given the discount rate and the future cash flow of each project listed in the following table, . use the Pl to determine which projects the company should accept. What is the Pl of project A? i Data Table (Round to two decimal places.) (Click on the following icon o in order to copy its contents into a spreadsheet.) Cash Flow Project A -%241,900,000 $150,000 $350,000 Project B Year 0 $2,300,000 $1,150,000 $950 000 $750,000 $550,000 Year 1 Year 2 Year 3 $550,000 Year 4 $750,000 $950,000 4% Year 5 $350.000 Discount rate 18% Print Done

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