(IRR with uneven cash flows) The Tiffin Barker Corporation is considering introducing a new currency verifier that has the ability to identify counterfeit dollar bills. The required rate of return on this project is 12 percent. What is the IRR on this project if it is expected to produce thefollowing free cash flows: E?The IRR on this project is %. (Round to two decimal places)Data table(Click on the following icon in order to copy its contents into a spreadsheet)Initial outlay- $1,088,524FCF in year 1240,000FCF in year 2360,000FCF in year 3360,000FCF in year 4240,000FCF in year 5240,000FCF in year 6140,000

Calculate the IRR of the project using Excel as follows:Formula sheet:Notes:To understand the…

Answered: (IRR with uneven cash flows) The Tiffin…

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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A potential project provides the following: Initial Investment = 36,101 Annual cash Flows = 12,101 period= 5 years What is the discount rate If NPV = 0? Answer in the format: #0.00 Answer as a percentage but without the % sign Example 0 0651 is entered as 6.51 Do not round intermediary calculations. Use full precision of your calculator or Excel. Do not include commas or dollar signs. Round properly to two decimal places Example: .157835 would be .16 Example: 2.3491 would be entered 2.35 HINT: Be sure your answer is percentage
Consider the cash flow data in the table below for two competing investment projects. At i= 10%, which of the two projects would be a better choice? Click the icon to view the cash flows for the investment projects. Click the icon to view the interest factors for discrete compounding when i = 10% per year. The PW value for project A is S. (Round to the nearest dollar.) More Info More Info Single Payment Compound Cash Flow Data (Unit: $ thousand) Project B Amount Factor (F/P, i, N) 1.1000 1.2100 1.3310 1.4841 1.6105 1.7716 1.9487 2.1438 2.3579 2.5937 0 1 2 3 4 5 6 7 8 9 10 Project A - $1,100 - 1,500 -435 1,005 1,005 1,325 1,795 605 605 355 850 - $3,300 -780 800 950 1,220 1,730 1,500 980 890 410 1,050 N 1 2 3 4 5 6 7 8 10 Present Worth Factor (P/F, i, N) 0.9091 0.8264 0.7513 0.6830 0.6209 0.5845 0.5132 0.4665 0.4241 0.3855 Compound Amount Factor (F/A, i, N) 1.0000 2.1000 3.3100 4.6410 6.1051 7.7156 9.4872 11.4350 13.5795 15.9374 Equal Payment Series Sinking Present Fund Worth Factor…
NPV profile of a project. Given the following cash flow of Project L-2, draw the NPV profile. Hint: Be sure to use a discount rate of zero for one intercept (y-axis) and solve for the IRR for the other intercept (x-axis). (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 = - $300,000 Year 1= $42,000 Year 2 = $77,000 Year 3 = $111,000 Year 4 = $140,000 What is the NPV of Project L-2 where zero is the discount rate? $ 70000.00 (Round to the nearest dollar.) What is the IRR of Project L-2? % (Round to two decimal places.)
I want you to show and explain the explanation below. The answer is correct but i can't understand how it come up with the right answer. Attached pic below is the problem The annual estimated cash flow is $140,000. The salvage value will be 12% of the initial price after 5 years. The discount rate (r) is 18% Let us assume the initial price of the doughnut machine be X. PV of cash inflows=PV of cash outflows$140,000×PVAF4,18%+.12X×PVF5,18%=X$140,000×2.69006180465+.12X×0.43710921621=X$376,608.652651=X-0.05245310594$376,608.652651=0.94754689406XX=$397,456.479475 The maximum purchase price of the doughnut machine is $397,456.48.
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You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): a. What are the IRRs of the two projects? b. If your discount rate is 4.7%, what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 Project A Year 1 - -$51 $27 B - $101 $22 Year 2 $21 $42 Year 3 $20 Year 4 $13 $51 $59 - ☑
May I ask for an explanation and supporting solution in 2 Decimal place to the problem for a better understanding. Thank you!
Salt Lake Potash is considering a project with the following cash flows. An initial investment of $1.025bn is required for the project. The discount rate is 9%. The company wants to calculate how long it would take investors to recover their initial investment. The company does not want to ignore the effects of time value of money and the discount rate. Year O CF ($mn) -$1,025 1.83 years 2.26 years What is your best estimate of the time to recovery? $159.79mn 1 2 $650 $450 19.9% 3 $250 4 $50
Nashville's Kitchen Corp. is considering a proposed project with the following cash flows. If both the discount rate and the reinvestment rate are 16 percent, what is the project’s modified internal rate of return (MIRR) using the combination approach? Solve using a Financial Calculator showing all calculator inputs. Year Cash Flow 0 –$375,000 1 133,500 2 -35,600 3 244,700 4 271,000
Complete the following table and compute the project's conventional payback period. For full credit, complete the entire table. (Note: Round the conventional payback period to two decimal places. If your answer is negative, be sure to use a minus sign in your answer.) Year 0 Year 1 Year 2 Year 3 Expected cash flow -$4,000,000 $1,600,000 $3,400,000 $1,400,000 Cumulative cash flow %24 %24 %24 Conventional payback period: years The conventional payback period ignores the time value of money, and this concerns Green Caterpillar's CFO. He has now asked you to compute Beta's discounted payback period, assuming the company has a 10% cost of capital. Complete the following table and perform any necessary calculations. Round the discounted cash flow values to the nearest whole dollar, and the discounted payback period to two decimal places. For full credit, complete the entire table. (Note: If your answer is negative, be sure to use a minus sign in your answer.) Year 0 Year 1 Year 2 Year 3 Cash…
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This problem is useful for testing the ability of financial calculators or excel. Consider the following cash flows. How many different IRRs are there (Hint: search between 20 percent and 70 percent)? When should we take this project?( u can use Excel) Year Cash Flow 0 -$3,024 1 17,172 2 -36,420 3 34,200 4 -12,000

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