If you have the following information about ice-cream manufacturing unit: Year Net Returns Discount rate 10% 0 -1700 1 1,700- 1 1000 0.909 909 2 1000 0.826 826 3 -800 0.751 601- 4 1200 0.683 820 5 -300 0.621 186- 6 1350 0.564 761 7 -750 0.513 385- 8 -450 0.467 210- 9 -200 0.424 85- 10 900 0.386 347 Calculate Discounted Payback period IRR and if the hurdle rate = 25%, shall we accept the project or not ? Why ? NPV
If you have the following information about ice-cream manufacturing unit: Year Net Returns Discount rate 10% 0 -1700 1 1,700- 1 1000 0.909 909 2 1000 0.826 826 3 -800 0.751 601- 4 1200 0.683 820 5 -300 0.621 186- 6 1350 0.564 761 7 -750 0.513 385- 8 -450 0.467 210- 9 -200 0.424 85- 10 900 0.386 347 Calculate Discounted Payback period IRR and if the hurdle rate = 25%, shall we accept the project or not ? Why ? NPV
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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Question
- If you have the following information about ice-cream manufacturing unit:
|
Year |
Net Returns |
Discount rate 10% |
|
|
0 |
-1700 |
1 |
1,700- |
|
1 |
1000 |
0.909 |
909 |
|
2 |
1000 |
0.826 |
826 |
|
3 |
-800 |
0.751 |
601- |
|
4 |
1200 |
0.683 |
820 |
|
5 |
-300 |
0.621 |
186- |
|
6 |
1350 |
0.564 |
761 |
|
7 |
-750 |
0.513 |
385- |
|
8 |
-450 |
0.467 |
210- |
|
9 |
-200 |
0.424 |
85- |
|
10 |
900 |
0.386 |
347 |
Calculate
- Discounted Payback period
IRR and if the hurdle rate = 25%, shall we accept the project or not ? Why ?NPV - Discounted Average rate of returns
- Net Average
Rate of Return
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