Consider the following cash flows of two mutually exclusive projects for AZ-Motorcars. Assume the discount rate for both projects is 11 percent. Year AZM Mini-SUV 0-$520,000 1 2 3 334,000 208,000 164,000 AZM Mini-SUV AZF Full-SUV a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) AZF Full-SUV -$ 870,000 364,000 AZM Mini-SUV AZF Full-SUV 448,000 304,000 b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) AZM Mini-SUV AZF Full-SUV 1.89 years 2.19 years c. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) % %

Consider the following cash flows of two mutually exclusive projects for AZ-Motorcars. Assume the discount rate for both projects is 11 percent. Year AZM Mini-SUV 0-$520,000 1 2 3 334,000 208,000 164,000 AZM Mini-SUV AZF Full-SUV a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) AZF Full-SUV -$ 870,000 364,000 AZM Mini-SUV AZF Full-SUV 448,000 304,000 b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) AZM Mini-SUV AZF Full-SUV 1.89 years 2.19 years c. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) % %

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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A project that will provide annual cash flows of $2,600 for nine years costs $10,700 today? a. At a required return 12%, what is the NPV of the project? (DO NOT ROUND INTERMEDIATE CALCULATIONS AND ROUND YOUR ANSWER TO 2 DECIMAL PLACES) b. At a required return of 28%, what is the NPV of the project? (DO NOT ROUND INTERMEDIATE CALCULATIONS AND ROUND YOUR ANSWER TO 2 DECIMAL PLACES) c. At what discount rate would be indifferent between accepting the project and rejecting it? (DO NOT ROUND INTERMEDIATE CALCULATIONS AND ROUND YOUR ANSWER TO 2 DECIMAL PLACES) Could someone please help me solve this in excel?
Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate for both projects is 9 percent. Year Dry Prepreg Solvent Prepreg 0 −$ 1,770,000 −$ 785,000 1 1,107,000 410,000 2 914,000 670,000 3 757,000 404,000 a. What is the payback period for both projects? b. What is the NPV for both projects? c. What is the IRR for both projects? d. Calculate the incremental IRR for the cash flows.
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 -$ 29,300 11,500 12345 14,200 16,100 13,200 -9,700 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR % b. Reinvestment approach MIRR 14.18 % c. Combination approach MIRR 13.68 %
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.
Consider the cash flows for projects Alpha and Beta as follows: Project Alpha Beta Required: (a) (b) Year 0 cash flow -$250 - $150 Year 1 cash flow 0 Year 2 cash flow 400 200 0 Determine the discount rate that will make the NPV of the two projects equal. (Ignore negative discount rates.) Determine the range of discount rates in which project Alpha is preferred to project Beta.
Two projects, Alpha and Beta, are being considered using the payback method. Each has an initial cost of $100,000. The annual cash flows for each project are listed below. a) What is the pay back period in years for Alpha? (round to two decimal places) b) What is the pay back period in years for Beta? (round to two decimal places) Year Project Alpha Project Beta 1 25,000 15,000 2 25,000 25,000 3 25,000 45,000 4 25,000 30,000 5 25,000 20,000 25,000 15,000
Solo Corp, is evaluating a project with the following cash flows: Cash Flow -$28,200 10,400 Year 0 12440 3 5 13,100 15,000 12,100 8,600 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. MIRR Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) %
Duo Corporation is evaluating a project with the following cash flows. The company uses a discount rate of 12 percent and a reinvestment rate of 9 percent on all of its projects. Year 0 Cash Flow -$ 16,100 1 2 12345 7,200 8,400 3 8,000 4 5 ces 6,800 -4,200 Calculate the MIRR of the project using all three methods with these interest rates. 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 % % %
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 1 2 3 -$20,000 8,850 9,100 8,800 2 Instruction: Sketch the NPV profiles for X and Y over a range of discount rates from 0% to 25%. What is the crossover rate for these two projects (when both projects have the same NPV)? Show your steps. -$20,000 10,100 7,800 8,700 A▾ B I = 18 1
2. You are considering two mutually exclusive projects with the following cash flows. The discount rate is 7.5 percent: YEAR PROJECT N PROJECT Y - P21,000,000 - P21,000,000 1 7,200,000 8,500,000 (a) Calculate the payback period of each project. ( (b) Compute the net present value of the two projects. (c) Which project should be accepted? Justify your answer. 2 4,900,000 5,200,000 9,100,000 4,900,000 4 6,100,000 8,700,000
Consider the following cash flows of two mutually exclusive projects for AZ-Motorcars. Assume the discount rate for both projects is 12 percent. Year AZM Mini-SUV AZF Full-SUV -$ 550,000 340,000 220,000 170,000 0123 a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) AZM Mini-SUV AZF Full-SUV -$ 900,000 370,000 460,000 310,000 AZM Mini-SUV AZF Full-SUV years years b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
A project has the following cash flows: Cash Year Flow 16,300 1 7,000 8,300 6,800 2 3 a. What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What is the NPV at a discount rate of 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the NPV at a discount rate of 19 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the NPV at a discount rate of 28 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) а. NPV b. NPV C. NPV NPV

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