EXERCISE 2. Compare the projects below using the NPV, PP,PI. The discount rate is 20%. Project 1 A B C 0 -370 -240 -263,5 60 100 -20000 -25000 2 60 100 7000 2500 3 1 60 100 EXERCISE 3. Compare the projects below using the NPV, PP,PI. The discount rate is 13%. Project 0 A B 7000 5000 4 2 60 100 3 5 7000 10000 60 100 6 1000 60 100 4 7000 20000

EXERCISE 2. Compare the projects below using the NPV, PP,PI. The discount rate is 20%. Project 1 A B C 0 -370 -240 -263,5 60 100 -20000 -25000 2 60 100 7000 2500 3 1 60 100 EXERCISE 3. Compare the projects below using the NPV, PP,PI. The discount rate is 13%. Project 0 A B 7000 5000 4 2 60 100 3 5 7000 10000 60 100 6 1000 60 100 4 7000 20000

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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Time 0 Time 1 Time 2 Time 3 Project A -10,000 5,000 4,000 3,000 If WiseGuy Inc is choosing one of the above mutually exclusive projects (Project A or Project B), given a discount rate of 7%, which should the company choose? O Both projects both have positive NPV. O Neither project both have negative NPV. O Project A Project B Project B -10,000 4,000 3,000 10,000
Cooney Co. is evaluating the following mutually exclusive projects. The manager has determined that the appropriate discount rate is 6.2% for all the recommended projects. Rank order the projects based on the profitability index. Project A Project B Project C (35,000) (65,000) (86,000) Year 0 1 2 3 55,000 40,000 22,000 22,000 44,000 44,000 35,000
Cooney Co. is evaluating the following mutually exclusive projects. The manager has determined that the appropriate discount rate is 6.20% for all the recommended projects. Rank order the projects based on the net present value. Project A Project B Project C (35,000) (65,000) (86,000) Year 0 1 2 3 55,000 40,000 22,000 22,000 44,000 44,000 35,000
Project A: IRR = 4%, Initial cost =100, NPV = 200 Project B: IRR = 14%, Initial cost =200, NPV = 230 Project C: IRR = 6%, Initial cost = 300, NPV = 300 Project D: IRR = 22%, Initial cost = 100, NPV = 260 If you can only choose 1 of the above projects above, which one should you choose? Project A Project B Project C Project D Not enough information to determine which project is preferred
Wilson is concerned that this project has multiple its year 1, 2 flows -50 100 0 -50 how many discount rates produce a zero NPV for the project? a. two, discount rates of 0% and 62% b.one, discount rate of 0 percent c. two, discount rates of 0% and 32%
which has a better IRR Project 1 Year Cashflows Discount Rate 10% 0 $ (750,000.00) 1 $ 250,000.00 2 $ 300,000.00 3 $ 350,000.00 4 $ 200,000.00 5 $ 100,000.00 Project 2 Year Cashflows Discount Rate 10% 0 $ (1,000,000.00) 1 $ 200,000.00 2 $ 300,000.00 3 $ 400,000.00 4 $ 500,000.00 5 $ 700,000.00
3. A. B. C. time Capital Budgeting Project S Project L D. 0 -1000 -1000 1 500 100 2 400 200 3 300 300 4 200 400 5 100 500 USE NPV METHOD, assuming the WACC is 10%. Which project will you invest? Use IRR method, which project will you invest? Assuming WACC is 10%, use MIRR, which project will you invest? Use payback period method, which project will you invest?
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
Cooney Co. is evaluating the following mutually exclusive projects. The manager has determined that the appropriate discount rate is 6.20% for all the recommended projects. Rank order the projects based on the internal rate of return. Project A Project B Project C (35,000) (65,000) (86,000) 44,000 Year 0 1 2 3 55,000 40,000 22,000 22,000 44,000 35,000
None
#3 HE Year Project A Project B 0 -$20,000 -$23,000 1 2 3 15,200 5,900 2,100 14,300 8.100 7,100 Suppose the company uses the NPV rule to rank these two projects. Which project should be chosen if the appropriate discount rate is 15 percent?
The two projects are as follows. The discount rate is 10%. Project X Project Y Year Cash Flow Cash Flow 10 -$100,000 $100,000 1 $50,000 $10,000 2 $40,000 $30,000 3 $30,000 $40,000 4 $10,000 $60,000 Imagine that the discount is 5%, and the two projects are mutually exclusive. Which project shall you choose? O Project X O Project Y O Both O None

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