When lives are equal adjustments to cash flows are not required.. TheMEAS can be compared by directly comparing their equivalent worth(PW, FW, or AW) calculated using the MARR. The decision will be thesame regardless of the equivalent worth method you use. For a MARRof 12%, select from among the MEAS below...... . ....... ..... ........ ....AlternativesACCapital investment-$150,000-$85,000-$75,000-$120,000Annual revenues$28,000$16,000$15,000$22,000Annual expenses-$1,000-$550-$500-$700Market Value (EOL)$20,000$10,000$6,000$11,000Life (years)10101010

Time Period (n) = 10 years MARR = 12%

Answered: When lives are equal adjustments to…

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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What is the NPV of the following cash flows if the required rate of return is 0.13? Year 0 1 2 3 4 CF -3,241 2,952 1,242 3,310 1,616 Enter the answer with 2 decimals (e.g. 1000.23).
7. Use the provided chart to solve this problem. Show your work.
es Suppose the returns on an asset are normally distributed. The historical average annual return for the asset was 5.7 percent and the standard deviation was 18.3 percent. a. What is the probability that your return on this asset will be less than -4.1 percent in a given year? Use the NORMDIST function in Excel® to answer this question. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What range of returns would you expect to see 95 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What range of returns would you expect to see 99 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter…
The NPV function automatically discounts each of the cash flows and sums the discounted values. Verify that it does this correctly for Acron’s model by calculating the NPV the long way. That is, discount each cash flow and then sum these discounted values. Use Excel formulas to do this, but don’t use the NPV function. (Hint: Remember that the discounted value of $1received t years from now is 1y(1 1 r)t dollars today.)
Determine the present value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Determine the present value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. 2. 3. 4. Future Amount $ 25,000 $ 19,000 $ 30,000 $ 45,000 ¡= 6% 10% 12% 11% n = 11 14 29 10 Present Value
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Determine the future value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. 2. 3 4. Invested Amount 15,000 20,000 30,000 50,000 $ $ $ U $ i = 6% 8% 12% 4% n = 12 10 20 12 Future Value
Cashbalance,beginning.....................P9 P ? P ? P? P?Add collectionsfromcustomers..... ? ? 125 ? 391Totalcash available................... 85 ? ? ? ?Less disbursements:Purchaseofinventory..................... 40 58 ? 32 ?Operatingexpenses............... ? 42 54 ? 180Equipmentpurchases................... 10 8 8 ? 36Dividends.......................... 2 2 2 2 ?Totaldisbursement.................... ? 110 ? ? ?Excess (deficiency) of cash availableOrdisbursements... ...................... (3) ? 30 ? ? Financing:Borrowings......................... ? 20 - - ?Repayments (including interest)*.. - - (?) (7) (?)Total financing......................... ? ? (?) (?) ?Cash balance, ending................... P ? P ? P ? P ? P ? *Interest will total P4, 000 for the year.
Determine the future value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. 2. 3. 4. Invested Amount 15,500 23,000 35,000 56,000 $ 67 67 $ $ $ i = 5% 5% 11% 6% n = 12 6 18 14 Future Value
Find the internal rate of return (IRR) for the following cash flows. Enter your answer as a percent and include at least two decimal points, e.g., 8.35 for 8.35 %, not 0.08. Year Cash Flow 0 750 1 200 2 375 3 250 4 100 5 75
What is the IRR of the following set of cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Year Cash Flow 0 –$ 17,300 1 8,000 2 9,300 3 7,800
Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. For r=0.1, calculate the present value of the two assets. Determine the set of all interest rates {r} such that asset A is more valuable than asset Draw the present value of the assets as a function of the interest rate. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)

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