Compute the Discounted Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent and the maximum allowable discounted payback is 3 years.| Time | 0 | 1 | 2 | 3 | 4 | 5 ||------------|------|------|------|------|------|------|| Cash flow | -1,000 | 350 | 630 | 550 | 450 | 300 |### Explanation of Table- **Time:** Represents the years from the start of the project (Year 0 to Year 5).- **Cash Flow:** Indicates the cash flow for each year. The initial investment (Year 0) is -1,000, followed by cash inflows in subsequent years.

Year Cash Flow 0 -1000 1 350 2 630 3 550 4 450 5 300 Discounted Payback period = 3…

Compute the Discounted Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent and the maximum allowable discounted payback is 3 years. Time: 1 2 3 4 Cash flow: -1,000 350 630 550 450 300

Compute the Discounted Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent and the maximum allowable discounted payback is 3 years. Time: 1 2 3 4 Cash flow: -1,000 350 630 550 450 300

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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You are given the following cash flow information for a project. Given this information, and assuming that the correct risk-adjusted discount rate (WACC) to use is 14 percent, while the firm's true reinvestment rate is 23 percent, determine the modified net present value (MNPV) for this project. Year 0 1 2 3 4 5 O $20,408 O $22,162 O $21.277 $21,728 O$20,883 Cash Flow -$20,000.00 $16,000.00 $10,000.00 $15,000.00 $16,000.00 $17,000.00
The net cash flow per year for the investment projects A and B, is presented in the table below. Expected Net Cash Flow ($) Project 0 1 2 3 4 A -10,000 6500 3000 3000 1000 B -10,000 3500 3500 3500 3500 Calculate the NPV, IRR, PI, and PVR for the cash flows given in the following table. Assume the minimum acceptable rate of return of 8%. Which projects should be accepted if they are independent projects? Would the selection of the projects change if the cost of capital were 12%?
The cash flows associated with an investment project are as follows: Year Project Y 0 (40 000) 1 10000 2 10000 3 15000 4 20000 The required return is 5 percent. Reinvestment rate 6%. What’s the discount payback period of the projects? (compile a spreadsheet) Calculate NPV, PI, IRR , MIRR of a projects Should the firm accept the project?
Given the following cash flows for project X and project Y, Year Project X Project Y 0 -55000 -100000 1 20000 15000 2 13500 17000 3 11000 19000 4 10000 25000 5 9000 30000 6 7500 35000 Calculate the NPV, IRR, MIRR and traditional payback period for each project, assuming a required rate of return of 7 percent If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected? (Answer in word form please)
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: Cash flow: 2 3 -$5,300 $1,1908 $2,390 $1,590 $1,590 $1,390 $1,190 Use the IRR decision rule to evaluate this project. (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.) IRR %
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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
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: -$4,900 $1,260 $2,460 $1,660 $1,660 $ 1,460 $1,260 Use the NPV decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively. Time: 0 1 2 3 4 5 Cash flow -$228,000 $65, 100 $83,300 $140, 300 $121,300 $80, 500 Use the discounted payback decision rule to evaluate this project. (Do not round intermediate…
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Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: Cash flow: 0 -$15, 200 MIRR 1 $3,000 3 2 $4,200 $3,400 Use the MIRR decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) % 5 $3,400 $3,200 6 $3,000
Compute the payback period statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown in the chart if the maximum allowable payback is four years. year 0-(-$1,450) Year 1-$250 Year 2-$380 Year 3-$620 Year 4-$1,000 Year 5-$100

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