Consider the following two projects: Year 0 Year 1 Project Cash Flow Cash Flow - 100 -73 OA. 2 OB. 3 O C. 1 OD. 0 Year 2 Cash Flow 40 30 Year 3 Cash Flow Year 4 Cash Flow A 50 60 B 30 30 The maximum number of incremental IRRs that could exist for project B over project A is: N/A 30 Discount Rate .15 15

Consider the following two projects: Year 0 Year 1 Project Cash Flow Cash Flow - 100 -73 OA. 2 OB. 3 O C. 1 OD. 0 Year 2 Cash Flow 40 30 Year 3 Cash Flow Year 4 Cash Flow A 50 60 B 30 30 The maximum number of incremental IRRs that could exist for project B over project A is: N/A 30 Discount Rate .15 15

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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Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? WACC: 10.75% Year 0 1 2 3 Cash flows - $800 $510 $510 $510 a. 2.18 years b. 1.10 years c. 2.82 years d. 1.82 years e. 1.18 years
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Consider the following two projects: Project Year 0 Year 1 Cash Flow Cash Flow A B - 100 -73 40 30 OA. 2.7 years OB. 2 years OC. 2.3 years D. 2.5 years Year 2 Cash Flow 50 30 The payback period for project A is closest to Year 3 Cash Flow 40 30 *** Year 4 Cash Flow N/A 30 Discount Rate 0.1 0.1
3) Consider the following two projects: Net Cash Flow Each Period Initial Outlay 1 2 3 4 Project A $4,000,000 $2,003,000 $2,003,000 $2,003,000 $2,003,000 Project B $4,000,000 0 0 0 $11,000,000 Calculate the net present value of each of the above projects, assuming a 14 percent discount rate. What is the internal rate of return for each of the above projects? Compare and explain the conflicting rankings of the NPVs and IRRs obtained in parts a and b above. If 14 percent is the required rate of return, and these projects are independent, what decision should be made? If 14 percent is the required rate of return, and the projects are mutually exclusive, what decision should be made?
There is a project with the following cash flows : Year 0 1 2 1345 Cash Flow -$ 23,350 6,300 7,400 8,450 7,350 5,900 What is the payback period?
Consider the following two projects with cash flows in $: Project Year 0 Year 1 Year Year 3 Year 4 Discount Rate A - 100 40 50 60 n/a 0.15 B -73 30 30 30 30 0.15 For Project A, after two years, the project has been paid off for $90 out of $100. To find out the fraction of the third year, we take the $10 yet to be paid and divide it by $60, which is $10/$60 = 0.167. Therefore, the payback period for Project A is 2.167 years. Following the same logic, calculate the payback period for Project B.
Use the table for the question(s) below. Consider the following two projects: Year 0 Project Cash Flow A - 100 40 50 B - 73 30 30 The payback period for project A is closest to: OA. 2.0 years O B. 2.4 years C. 2.2 years O D. 2.5 years Year 1 Cash Flow Year 2 Cash Flow Year 3 Cash Flow 60 30 Year 4 Cash Flow N/A 30 Discount Rate .15 .15
Given a discount rate of 12.5%, find the NPV of the 7-year project. Year Cash flow 0 -18,000 1 500 23 500 3,000 4 3,000 5 5,000 69 5,000 7 10,000
Yellow Day has a project with the following cash flows: Year 0 1 2 Cash Flows -$ 26, 200 10,150 17,100 9,240 -3,200 What is the MIRR for this project using the reinvestment approach? The interest rate is 7 percent. 4 Multiple Choice 10.24% 14.50% 8.54% 11.39% 13.29%
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Consider a project with the following cash flows in dollars ($): Year Cash Flow0 -15,0001 50002 50003 50004 5000 Assume the appropriate discount rate for this project is 12%. What is the payback period for this project? (Round your answer to the tenths.)
Use the Modified IRR (MIRR) method to determine the rate of return of a project that has the following cash flow diagram. The investment rate is 15% and the borrowing rate is 12%. g = 20% $3 $3 $3 $3 years 11 3. 4 6. 7 8 9 10 $2 S2 $2 $2

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