Cash flows for project M are shown below: year CFM 0 (100) 1 10 2 60 3 80 The project has a cost of capitalof 10%. a. Calculate the payback for project M. [5] b. Calculate the NPV for project M. [5] c.. Acompany is evaluating an investment project with the following forecast cash flows: Year 0 1 2 3 4 Cashflow ($m) (6-5) 2-43-12-11-8 Using discount rates of 15% and 20%, what is the internal rate of return of theinvestment project? (10)

a. Payback PeriodThe payback period represents the time it takes for the project's cumulative cash…

Answered: Cash flows for project M are shown…

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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Benihana has prepared the following estimates provided in the table below for the project under consideration. Calculate the payback period, the discounted payback period, net present value and internal rate of return. 8 Cost of Capital 11.00% 10 Cash Flows Project A 124,071 28,993 11 Year 12 Initial Investment (time 0) 13 14 2. 28,630 15 48,568 16 4 31,173 17 5 84,078 18 19 20 21 22 23 24
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
Use the information below to answer Question#40: GIVEN: The XYZ Company is considering the following project with its corresponding financial data. The Company requires a 9% return from its investments. $ 500,000 $ 200,000 $ 225,000 $ 245,000 Initial investment: Expected Cash in-flow Year 1: Expected Cash in-flow Year 2: Expected Cash in-flow Year 3: Present Value Factor of 1 at 9%: n=1: 0.91743 n=2: 0.84168 n=3: 0.77218 40) Choose from one of the following that accurately depicts this decision: A) This investment should not be considered because NPV is a negative $62,048 B) This învestment should be considered because NPV equals positive $62,048 C) This investment should be considered because the IRR for this investment is obviously less than its Required Rate of Return D) B and Care both correct
Suppose a project has the following cash flows. What is the NPV if the cost of the project is $105,000 and the required return is 9.75%? Year Cash Flow $28.000 32,000 3 36,000 4 39,000 O$6,000 O $20,678 $1,193 $27,335 O $30,000 Page 16 of 30
Note: Question 12, 13, 14 and 15 are based on the same two projects A and B. Your firm has estimated the following cash flows for two mutually exclusive capital investment projects. Firm uses 4.9 years as the cutoff for the discounted payback period. The firm's required rate of return is 11%. What is the IRR of project B? Project A Cash Flow Year Project B Cash Flow -$80,000 -$180,000 1 $23,000 $53,000 2 $23,000 $53,000 3 $23,000 $47,000 4 $20,000 $47,000 $20,000 $40,000 6 $20,000 $27,000 O 16.21% 10.55% 13.98% O 13.65% 12.22%
Rubash Company is considering a project that has the following cash flow and WACC data. What is the project's MIRR? WACC = 9% Year: 0 1 2 3 Cash flows: - $1,500 $400 $525 $940 a. 8.00% b 8.45% c. 8.75% d. 9.33% e. 9.83%
Company Z is considering a project that has the following cash flow data. What is this project's IRR? Year 0 1 2 3 4 Cash Flow -2,200 700 720 740 760 Group of answer choices 9.38% 12.18% 8.53% 10.36% 11.21%
A firm has a project with the following cash flows: Year Cash Flow 0 $30,000 1 -6,000 2 -9,000 3 48,000 The required rate of return is 6%. Which of the following statement on decision rules is incorrect? A. IRR decision rule can be safely used to evaluate the project. B. NPV decision rule can be safely used to evaluate the project. C. Modified IRR decision rule can be safely used to evaluate the project. D. Profitability index decision rule can be safely used to evaluate the project.
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$ 243,567 -$ 15,530 1 27,200 55,000 60,000 413,000 234 5,173 8,261 13,237 8,729 Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A? Payback period
What is the NPV of the estimated cash flows for the following project using a Weighted Average Cost of Capital of 7.0%? Year 0 1 2 3 Cash Flow -140 50 70 90 Group of answer choices 47.54 38.63 59.94 70.00 41.34
Consider the investment project with the following net cash flows: What would be the value of X if the project's IRR is 25%?
Carland, Incorporated, has a project available with the following cash flows. If the required return for the project is 7.9 percent, what is the project's NPV? Year Cash Flow 0 -$ 258,000 1 66, 300 2 90, 400 3 117,800 4 70,900 5-12,000 $35, 378.61 $18, 968.78 $27, 173.69 $15, 173.69 $13,276.98

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