Complete the following 6 Wk 3 Financial Exercises: Problem Set 1, Part 2 problems: 1. Calculate the net present value (NPV) of the following cash flow stream if the required rate is 12%: Insert your NPV calculation. Year Cash Flow Is this a good project for the business to accept? Explain why or why not. Insert your answer. 2. Calculate the NPV of the following cash flow projections based on a required rate of 10.5%: Insert your NPV calculation. Year Cash Flow Is this a good project for the business to accept? Explain why or why not. Insert your answer. 3. A company needs to decide if it will move forward with 2 new products that it is evaluating. The 2 initiatives have the following cash flow projections: Project A Project B Year Cash Flow Year Cash Flow Based on the risk of each project, the company has a required rate of return of 11% for Project A and 11.5% for Project B. The company has a $1.5 million budget to spend on new projects for the year. Should the company move forward with one, both, or neither of the two new products? Show your work to support your answer. Insert your answer. 4. Calculate the internal rate of return (IRR) of the following cash flows: Year Cash Flow Insert your answer. 5. If a company has a required rate of return of 15%, should the following project be accepted based on these expected cash flows below? Year Cash Flow Explain why or why not the company should move forward with this endeavor. Insert your answer. 6. Based on the investor expectations of earning at least 12%, should this projected below be completed? Year Cash Flow Explain why or why not the company should move forward with this endeavor. 0 (230,000) 1 60,000 0 1 (120,000) 35,000 0 -800,000 8N 2 2 47,500 0 1 (133,000) 37,000 60,000 60,000 8w 3 0 1 2 (274,000) 68,000 73,000 1 2 3 4 220,000 265,000 292,000 317,000 2 42,750 4 60,000 3 4 55,000 62,000 0 1 2 3 4 5 -650,000 175,000 175,000 175,000 175,000 175,000 0 1 2 3 4 5 6 (1.650,000) 330,000 365,000 380,000 415,000 405,000 370000 3 4 76,500 78,000 3 44,000 5 60,000 4 46,500 5 82,500 5 82,500 6 77,000 6 77,000 7 294,000
Complete the following 6 Wk 3 Financial Exercises: Problem Set 1, Part 2 problems: 1. Calculate the net present value (NPV) of the following cash flow stream if the required rate is 12%: Insert your NPV calculation. Year Cash Flow Is this a good project for the business to accept? Explain why or why not. Insert your answer. 2. Calculate the NPV of the following cash flow projections based on a required rate of 10.5%: Insert your NPV calculation. Year Cash Flow Is this a good project for the business to accept? Explain why or why not. Insert your answer. 3. A company needs to decide if it will move forward with 2 new products that it is evaluating. The 2 initiatives have the following cash flow projections: Project A Project B Year Cash Flow Year Cash Flow Based on the risk of each project, the company has a required rate of return of 11% for Project A and 11.5% for Project B. The company has a $1.5 million budget to spend on new projects for the year. Should the company move forward with one, both, or neither of the two new products? Show your work to support your answer. Insert your answer. 4. Calculate the internal rate of return (IRR) of the following cash flows: Year Cash Flow Insert your answer. 5. If a company has a required rate of return of 15%, should the following project be accepted based on these expected cash flows below? Year Cash Flow Explain why or why not the company should move forward with this endeavor. Insert your answer. 6. Based on the investor expectations of earning at least 12%, should this projected below be completed? Year Cash Flow Explain why or why not the company should move forward with this endeavor. 0 (230,000) 1 60,000 0 1 (120,000) 35,000 0 -800,000 8N 2 2 47,500 0 1 (133,000) 37,000 60,000 60,000 8w 3 0 1 2 (274,000) 68,000 73,000 1 2 3 4 220,000 265,000 292,000 317,000 2 42,750 4 60,000 3 4 55,000 62,000 0 1 2 3 4 5 -650,000 175,000 175,000 175,000 175,000 175,000 0 1 2 3 4 5 6 (1.650,000) 330,000 365,000 380,000 415,000 405,000 370000 3 4 76,500 78,000 3 44,000 5 60,000 4 46,500 5 82,500 5 82,500 6 77,000 6 77,000 7 294,000
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
Transcribed Image Text:Complete the following 6 Wk 3 Financial Exercises: Problem Set 1, Part 2
problems:
1. Calculate the net present value (NPV) of the following cash flow stream if the
required rate is 12%:
Insert your NPV calculation.
Year
Cash Flow
Is this a good project for the business to accept? Explain why or why not.
Insert your answer.
2. Calculate the NPV of the following cash flow projections based on a required
rate of 10.5%:
Insert your NPV calculation.
Year
Cash Flow
Is this a good project for the business to accept? Explain why or why not.
Insert your answer.
3. A company needs to decide if it will move forward with 2 new products that it is
evaluating. The 2 initiatives have the following cash flow projections:
Project A
Project B
Year
Cash Flow
Year
Cash Flow
Based on the risk of each project, the company has a required rate of return of
11% for Project A and 11.5% for Project B. The company has a $1.5 million
budget to spend on new projects for the year. Should the company move forward
with one, both, or neither of the two new products? Show your work to support
your answer.
Insert your answer.
4. Calculate the internal rate of return (IRR) of the following cash flows:
Year
Cash Flow
Insert your answer.
5. If a company has a required rate of return of 15%, should the following project
be accepted based on these expected cash flows below?
Year
Cash Flow
Explain why or why not the company should move forward with this endeavor.
Insert your answer.
6. Based on the investor expectations of earning at least 12%, should this
projected below be completed?
Year
Cash Flow
Explain why or why not the company should move forward with this endeavor.
0
(230,000)
1
60,000
0
-800,000
0
1
2
(120,000) 35,000 47,500
2
60,000
3
60,000
3
55,000
3
1
2
220,000 265,000 292,000
0
1
(133,000) 37,000
4
60,000
4
62,000
4
317,000
1
2
3
4
5
0
-650,000 175,000 175,000 175,000 175,000 175,000
5
60,000
0
1
2
3
5
6
(1,650,000) 330,000 365,000 380,000 415,000 405,000 370000
0
1
2
3
4
5
(274,000) 68,000 73,000 76,500 78,000 82,500
4
2
3
42,750 44,000 46,500
5
82,500
6
77,000
6
77,000
7
294,000
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