Consider the following cash flows on two mutually exclusive projects for the BahamaRecreation Corporation (BRC). Both projects require an annual return of 14 percent.YearDeepwaterFishing0 -$955,0001375,0002 514,0003425,000NewSubmarineRide1,860,000910,000805,000760,000a-1. Compute the IRR for both projects. (Do not round intermediate calculations andenter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)Deepwater FishingSubmarine Ride%%

Deepwashing Fishing17.40%New Submarine Ride16.33%Explanation: Cash Flows Discounted Cash Flows…

Answered: Consider the following cash flows on…

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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Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value. Project X Project Y Initial investment $241,666 $181,884 Net cash flows anticipated: Year 1 81,000 36,000 Year 2 59,000 55,000 Year 3 93,000 73,000 Year 4 80,000 68,000 Year 5 75,000 27,000 A. Compute the IRR for both projects using the IRR spreadsheet function. Project X fill in the blank 1% Project Y fill in the blank 2% B. Which project should be recommended.
Compute the IRR statistic for Project F. The appropriate cost of capital is 12 percent. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Project F Time: 01234 Cash flow: -$11,000 $ 3,350 $ 4,180 $ 1,520 $2,000 Should the project be accepted or rejected?
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Pitt Company is considering two alternative Investments. The company requires a 12% return from its Investments. Neither option has a salvage value. Project X Project Y $243,046 $175,883 Initial Investment Net cash flows anticipated: Year 1 Year 2 Year 3 Year 4 Year 5 82,000 60,000 91,000 82,000 75,000 A. Compute the IRR for both projects using the IRR spreadsheet function. Project X Project Y B. Which project should be recommended. Project X ✓ % % 35,000 54,000 73,000 69,000 26,000
Compute the MIRR statistic for Project I if the appropriate cost of capital is 12 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project I Time: Cash flow: 1 2 3 4 -$12,500 $6,080 $4,930 $2,270 $2,750 MIRR % Should the project be accepted or rejected?
Determine which of the following independent projects should be selected for investment if a maximum of $240,000 is available and the MARR is 10% per year. Use the PW method to evaluate mutually exclusive bundles to perform your analysis. Construct the cash flow diagram for each. Investment, Net Cash Flow, $ per year Life, Project years S -100,000 50,000 8 M -125,000 24,000 8 A -120,000 75,000 8. -220,000 39,000 8 -200,000 82,000 8.
The following are the cash flows of two independent projects: Year Project A Project B 0 $ (270 ) $ (270 ) 1 150 170 2 150 170 3 150 170 4 150 a. If the opportunity cost of capital is 12%, calculate the NPV for both projects. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $222,000 and would yield the following annual net cash flows. (PV of $1. EV of $1. PVA of $1, and EVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 Year 2 Year 3 Totals Project C1 $ 10,000 106,000 166,000 $ 282,000 Project C2 $ 94,000 94,000 94,000 $ 282,000 a. The company requires a 12% 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 12% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question. Complete this question by entering your answers in the tabs below. Required A Required B The company requires a 12% return from its investments. Compute net present values using factors from Table B.1 in Appendix B…
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Maud Dib Intergalactic has a new project available on Arrakis. The cost of the project is $36,000 and it will provide cash flows of $19,800, $25,300, and $24,200 over each of the next three years, respectively. Any cash earned in Arrakis is "blocked" and must be reinvested in the country for one year at an interest of 3.5 percent. The project has a required return of 8.5 percent. What is the project's NPV?
Ryan Corporation is considering three investment projects: X, Y, and Z. Project X would require an investment of $20,000, Project Y of $69,000, and Project Z of $83,000. No other cash outflows would be involved. The present value of the cash inflows would be $23,200 for Project X, $77,970 for Project Y, and $94,620 for Project Z. Rank the projects according to the profitability index from most profitable to least profitable. (Ignore income taxes.) (A) Z, X, Y B) X,Z,Y C) Y, X, Z D) Z, Y, X
Consider the follow cash flows on two mutually exclusive projects for the bahamas recreation corporation Both projects require an annual return of 14 percent year Deepwater New Sub 0 -875,000 -1,650,000 1 330,000 890,000 2 480,000 730,000 3 $440,000 590,000

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