IRR, investment life, and cash inflows Oak Enterprises accepts projects earning more than the firm's 13% cost of capital. Oak is currently considering a 10-yeal prujut $15,000 and requires an initial investment of $96,200. a. Determine the IRR of this project. Is it acceptable? b. Assuming that the cash inflows continue to be $15,000 per year, how many additional vears would the flows have to continue to make the project acceptable (that is, to make it have an IRR of 13%)? c. With the given life, an initial investment of $96,200, and cost of capital of 13%, what is the minimum annual cash inflow the investment would have to provide in order for this project to make sense for C shareholders? a. The project's IRR is %. (Round to two decimal places.) Is the project acceptable? (Select the best answer below.) O A. Yes O B. No b. Assuming that the cash inflows continue to be $15,000 per year, the number of additional years the flows would have to continue to make the project acceptable at the 13% discount rate is addition (Round to two decimal places.) c. With the given life, initial investment, and cost of capital, the minimum annual cash inflow that the firm should accept is $. (Round to the nearest cent.)
IRR, investment life, and cash inflows Oak Enterprises accepts projects earning more than the firm's 13% cost of capital. Oak is currently considering a 10-yeal prujut $15,000 and requires an initial investment of $96,200. a. Determine the IRR of this project. Is it acceptable? b. Assuming that the cash inflows continue to be $15,000 per year, how many additional vears would the flows have to continue to make the project acceptable (that is, to make it have an IRR of 13%)? c. With the given life, an initial investment of $96,200, and cost of capital of 13%, what is the minimum annual cash inflow the investment would have to provide in order for this project to make sense for C shareholders? a. The project's IRR is %. (Round to two decimal places.) Is the project acceptable? (Select the best answer below.) O A. Yes O B. No b. Assuming that the cash inflows continue to be $15,000 per year, the number of additional years the flows would have to continue to make the project acceptable at the 13% discount rate is addition (Round to two decimal places.) c. With the given life, initial investment, and cost of capital, the minimum annual cash inflow that the firm should accept is $. (Round to the nearest cent.)
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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Transcribed Image Text:IRR, investment life, and cash inflows Oak Enterprises accepts projects earning more than the firm's 13% cost of capital. Oak is currently considering a 10-year project that provides annual cash inflows of
$15,000 and requires an initial investment of $96,200.
b. Assuming that the cash inflows continue to be $15,000 per year, how many additional vears would the flows have to continue to make the project acceptable (that is, to make it have an IRR of 13%)?
c. With the given life, an initial investment of $96,200, and cost of capital of 13%, what is the minimum annual cash inflow the investment would have to provide in order for this project to make sense for Oak's
shareholders?
a. Determine the IRR of this project. Is it acceptable?
a. The project's IRR is
%. (Round to two decimal places.)
Is the project acceptable? (Select the best answer below.)
O A. Yes
O B. No
b. Assuming that the cash inflows continue to be $15,000 per year, the number of additional years the flows would have to continue to make the project acceptable at the 13% discount rate is
additional years
(Round to two decimal places.)
c. With the given life, initial investment, and cost of capital, the minimum annual cash inflow that the firm should accept is $. (Round to the nearest cent.)
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