For the given cash flows, suppose the firm uses the NPV decision rule.Year0O 23-$Cash Flow150,00066,00073,00057,000a. At a required return of 10 percent, what is the NPV of the project? (Do not roundintermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)b. At a required return of 20 percent, what is the NPV of the project? (A negative answershould be indicated by a minus sign. Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)a. NPVb. NPV

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Answered: For the given cash flows, suppose the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash Flow 0-$ 150,000 1 66, 000 2 73,000 3 57,000 a. At a required return of 10 percent, what is the NPV of the project? b. At a required return of 20 percent, what is the NPV of the project?
For the given cash flows, suppose the firm uses the NPV decision rule.Year Cash Flow0 −$ 159,0001 57,0002 82,0003 66,000. a. At a required return of 8 percent, what is the NPV of the project. b. At a required return of 19 percent, what is the NPV of the project.
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For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash Flow -$ 155,000 61,000 78,000 62,000 1 2 3 At a required return of 10 %, what is the NPV of the project? At a required return of 19%, what is the NPV of the project?
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 27,300 1 11,300 2 14,300 3 10,300 What is the NPV for the project if the required return is 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At a required return of 10 percent, should the firm accept this project? multiple choice 1 Yes No What is the NPV for the project if the required return is 26 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At a required return of 26 percent, should the firm accept this project? multiple choice 2 Yes No
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow $28,900 12,900 15,900 11,900 2. What is the NPV for the project if the required return is 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV
6.Calculate the project's Modified Internal Rate of Return (MIRR). What critical assumption does the MIRR make that differentiates it from the IRR? TIP : look for the definition of Modified Internal Rate of Return, and then do it in excel, easy !!! Year Net Cash flow Future Value of Net Cash flow 0 -$20.8 example 1 $4.5 $7.97 (n=6, i=10%)=fv(.1,6,,4.5) 2 $6.3 (n=5, i=10%) 3 $5.2 (n=4, i=10%) 4 $3.9 (n=3, i=10%) 5 $2.1 (n=2, i=10%) 6 $1.3 (n=1, i=10%) 7 $0.5 (n=0, i=10%) Sum = $XX.XX MIRR = ( in excel ) Rate ( 7,-20.8, xx.xx) 7.Where does the value of MIRR fall relative to the discount rate and IRR?
Consider the following cash flows: C0= -22, C1= 20, C2= 20, C3=20, C4= -40 a) Calculate both the internal rates of return on this project out of which one is (a shade above) 7% and that the other is (a shade below) 34%. b) is the project attractive if the discount rate is 5%? What is the NPV? c) Is the project attractive is the discount rate is 20%? What is the NPV? d) Is the project attractive is the discount rate is 40%? What is the NPV?
A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 −$ 28,000 1 24,000 2 13,000 3 6,000 a. At a required return of 28 percent, what is the NPV for this project? b. At a required return of 35 percent, what is the NPV for this project?
What is the internal rate of return of an investment that requires a 10 percent minimum rate of return and has the following projected cash flows: Yr0 = -100, Yr1 = 25, Yr2 = 35, Yr3 = 45, Yr4 = 35, and Yr5 = 30? a. 19.33 percent b. 21.35 percent c. 20.05 percent d. 22.24 percent
Project A and B have a cost of OMR (700). Each project generates cash flows as seen in the below table, According to the payback period method and in the line of risk and liquidity preference, answer the following:- (Hint:- Your answer must be not random.) which is the project you will select? Justfy your decision. End-of- Year Cash Flow Project 1 2 3 A 500 300 100 B 400 450 100
Project A and B have a cost of OMR (700). Each project generates cash flows as seen in the below table, According to the payback period method and in the line of risk and liquidity preference, answer the following:- (Hint:- Your answer must be not random.)a) which is the project you will select?b) Justfy your decision.End-of- Year Cash FlowProject 1 2 A 500 300 B 400 450

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