Internal Rate of Return Lepton Industries has three potential projects, all with an initial cost of $2,100,000 Given the discount rates and the future cash flows of each project, what are the IRRS of the three projects for Lepton Industries? Cash Flow Year 1 Year 2 Year 3 Year 4 Year 5 Project Q $500,000 $500,000 $500,000 $500,000 $500,000 Project R $700,000 $700,000 $700,000 $700,000 $700,000 Project S $1,100,000 $900,000 $700,000 $500,000 $300,000

Internal Rate of Return Lepton Industries has three potential projects, all with an initial cost of $2,100,000 Given the discount rates and the future cash flows of each project, what are the IRRS of the three projects for Lepton Industries? Cash Flow Year 1 Year 2 Year 3 Year 4 Year 5 Project Q $500,000 $500,000 $500,000 $500,000 $500,000 Project R $700,000 $700,000 $700,000 $700,000 $700,000 Project S $1,100,000 $900,000 $700,000 $500,000 $300,000

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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Porter Company is analyzing two potential Investments. Project X $ 97,090 Initial investment Net cash flow: Year 1 Year 2 Year 3 Year 4 Multiple Choice If the company is using the payback period method, and it requires a payback of three years or less, which project(s) should be selected? O 32,500 32,500 32,500 0 Both X and Y are acceptable projects. O Project Y. Project Y $ 77,000 Project Y because it has a lower Initial Investment. Project X 5,700 34,500 34,500 25,000 Neither X nor Y is an acceptable project.
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?
Mutually exclusive projects and NPV you have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows. year. Project A (cash flow) Project B 0 $(102,000) $(102,000) 1 31,000 0 2 31,000 0 3 31,000 0 4 31,000 0 5 31,000 240,000 if the appropriate discount rate on these is 11 percent, which would be chosen and why? the NPV of project A is $
NPV and EVA A project cost $3.2 million up front and will generate cash flows in perpetuity of $270,000. The firm's cost of capital is 8%. a. Calculate the project's NPV. b. Calculate the annual EVA in a typical year. c. Calculate the overall project EVA. a. The project's NPV is $. (Round to the nearest dollar.) ibra culat ource Enter your answer in the answer box and then click Check Answer. Check Ans udy Clear All 2 parts remaining Lation Tools> pe here to search
A new project will have an intial cost of $14,000. Cash flows from the project are expected to be $-4,000, $6,000, $8,000, and $12,000 over the next 4 years, respectively. Assuming a discount rate of 12%, what is the project's IRR? Question 5 options: 12.61% 13.14% 13.66% 13.93% 13.40%
Required: 1a. Compute the cash payback period for each project. Cash Payback Period Plant Expansion 2 years Retail Store Expansion 2 years 1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar. Plant Expansion Retail Store Expansion Total present value of net cash flow Less amount to be invested Net present value 78,782 73,933 2. Because of the timing of the receipt of the net cash flows, the plant expansion offers a higher net present value
Calculating Discounted Payback An investment project has annual cash inflows of $5,000, $5,500, $6,000, and $7,000, and a discount rate of 12 percent. What is the discounted payback period for these cash flows if the initial cost is $8,000? What if the initial cost is $12,000? What if it is $16,000?
Internal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $1,900,000. Given the discount rate and the future cash flow of each project, what are the IRRs and MIRRs of the three projects for Quark Industries? Cash Flow Project M Project N Project O Year 1 $500,000 $600,000 $1,000,000 Year 2 $500,000 $600,000 $800,000 Year 3 $500,000 $600,000 $600,000 Year 4 $500,000 $600,000 $400,000 Year 5 $500,000 $600,000 $200,000 Discount rate 9% 13% 16% What is the IRR for project M?
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Connor Corporation is considering two projects (see below). For your analysis, ass rate of return of 10%. Based on your analysis, which is the best choice? Initial Investment Cash Flow Year 1 PV NPV Profitability Index IRR Project A -465,000 510,000 463,636.364 ($1,363.64) $1.00 ANSWER 10% Project B -700,000 You can change the i 850,000 772,727.273
ternal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $1,900,000. Given the discount rate and the future cash flow of each project in what are the IRRS and MIRRS of the three projects for Quark Industries? Vhat is the IRR for project M? %3D Data Table % (Round to two decimal places.) (Click on the following icon in order to copy its contents into a spreadsheet.) Projoct O $1,000,000 S800,000 $600,000 $400,000 $200 000 15% Project M $500,000 $500.000 Cash Flow Project N Year 1 $600,000 $600.000 S600.000 S600.000 $600.000 11% Year 2 Year 3 $500.000 $500,000 S500,000 Year 4 Year 5 Discount rate 7%
Internal rate of return and modified internal rate of return. Quark Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rate and the future cash flow of each project in the following table, E, what are the IRRS and MIRRS of the three projects for Quark Industries? What is the IRR for project M? % (Round to two decimal places.) What is the MIRR for project M? Data table % (Round to two decimal places.) What is the IRR for project N? (Click on the following icon g in order to copy its contents into a spreadsheet.) % (Round to two decimal places.) Cash Flow Project M Project N Project O What is the MIRR for project N? Year 1 $500,000 $700,000 $1,100,000 Year 2 $500,000 $700,000 $900,000 % (Round to two decimal places.) Year 3 $500,000 $700,000 $700,000 Year 4 $500,000 $700,000 $500,000 What is the IRR for project O? Year 5 $500,000 $700,000 $300,000 % (Round to two decimal places.) Discount rate 8% 11% 16% What is the MIRR for project O? %…

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