Consider the following two mutually exclusive projects:Year Cash Flow (X) Cash Flow (Y)-$-$019,60019,6001238,7509,90028,9007,7008,7008,600

SummaryProject X NPV: $2,246.36Project Y NPV: $2,224.94Project X IRR: 16.41%Project Y IRR: 16.53%…

Answered: Consider the following two mutually…

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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Consider the following information: Cash Flows ($) Project C0 C1 C2 C3 C4 A –5,300 1,300 1,300 2,700 0 B –700 0 600 2,300 3,300 C –5,200 3,400 1,700 800 300 a. What is the payback period on each of the above projects? (Round your answers to 2 decimal places.)
Consider two investments with the fo llowing sequences of cash flows:Net Cush FlowII Project A Project B0 -$30.000 -$15,000I $2,000 $LO,OOO2 $6,000 $10,0003 $12,000 $10,0004 $24 .000 $10,0005 $28,000 $5.000(a) Compute the r:' for each investment.(b) Plot the present-worth curve for each project on the same chart and find the interest rate that makes the two projects equivalent.(c) Tf A and Bare mutually exclusive investment projects, which project is more economically desirable at MARR of 15%?
Mutually exclusive projects and NPV you have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows. year. Project A (cash flow) Project B 0 $(102,000) $(102,000) 1 31,000 0 2 31,000 0 3 31,000 0 4 31,000 0 5 31,000 240,000 if the appropriate discount rate on these is 11 percent, which would be chosen and why? the NPV of project A is $
2. Compute the IRR for the investment represented by the following cash flow table: Year 1 4 6. 7. Cash Flow -1200 +350 +300 +250 +200 +150 +100 +50 (in $1000's)
What is the IRR for this project? Year Cash Flow in $ 0 ($1000) 1 400 2 400 3 600
2) You have 3 projects with the following cash flows: Year 0 1 2 3 4 Project 1 -$150 $20 $40 $60 $80 Project 2 -825 0 0 7,000 -6,500 Project 3 20 40 60 80 -245 For which of these projects is the IRR rule reliable?
What is Project A's Modified Internal Rate of Return with a WACC of 7.75%? YEAR 0 1 2 3 4 CASH FLOWS Project A -$1050 675 650 Project B -$1050 360 360 360 360
Here are the expected cash flows for three projects: Cash Flows (dollars) Year 2 Project A C Year 8 -6,588 -2,580 -6,500 Year 1 +1,375 +1,375 +2,588 +1,375 +1,375 Year 3 +3,758 +2,758 +3,750 Year 4 8 +3,750 +5,758 a. What is the payback period on each of the projects? b. If you use the payback rule with a cutoff period of 2 years, which projects will you accept? c. If you use a cutoff period of 3 years, which projects will you accept? d-1. If the opportunity cost of capital is 12%, calculate the NPV for projects A, B, and C. Note: Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. d-2. Which projects have positive NPVs? e. "Payback gives too much weight to cash flows that occur after the cutoff date." True or false? a. Payback period b. If you use the payback rule with a cutoff period of 2 years, which projects will you accept? c. If you use a cutoff period of 3 years, which projects will you accept?…
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Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) -$ -$ 0 19,600 19,600 123 8,750 9,900 2 8,900 7,700 8,700 8,600