KYou are choosing between two projects. The cash flows for the projects are given in the following table ($ million):ProjectABa. What are the IRRS of the two projects?b. If your discount rate is 4.9%, what are the NPVs of the two projects?c. Why do IRR and NPV rank the two projects differently?a. What are the IRRS of the two projects?The IRR for project A is %. (Round to one decimal place.)Year 0-$48- $102Year 1Year 2Year 3Year 4$23$18$22$14$19$38$51$60

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Answered: K You are choosing between two…

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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Please double check your work !! the answer is not 50.55 or 37.52 % You are considering an investment project with the cash flows of -300 (the initial cash flow), 800 (cash flow at year 1), -200 (cash flow at year 2). Given the discount rate of 10%, compute the Modified Internal Rate of Return (MIRR) using the discountingapproach. 50.55% 19.72% 71.94% 37.52%
You are choosing between two projects. The cash flows for the projects are given in the following table ( $ million ) : What are the IRRs of the two projects? If your discount rate is 5.4 % , what are the NPVs of the two projects? Why do IRR and NPV rank the two projects differently?
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 4.6%, What are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? **round to one decimal place**
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?
You are considering an investment in two normal cash flow and mutually exclusive projects. Project Apple has an internal rate of return of 13.6%, while Project Brewster has an internal rate of return of 15.75%. At a discount rate of 9.8% each project has the same net present value. If the appropriate weighted average cost of capital is 9.25%, which project(s), if any, should be adopted? Explain your decision.
Consider the cash flows for projects Alpha and Beta as follows: Project Alpha Beta Required: (a) (b) Year 0 cash flow -$250 - $150 Year 1 cash flow 0 Year 2 cash flow 400 200 0 Determine the discount rate that will make the NPV of the two projects equal. (Ignore negative discount rates.) Determine the range of discount rates in which project Alpha is preferred to project Beta.
You are considering a project that has the following cash flow data. What is the project's payback? Year 0 1 2 3 Cash Flow -900 350 450 550 Group of answer choices 2.40 1.53 1.96 2.18 2.62
Profitability index. Given the discount rate and the future cash flow of each project listed in the following table, , use the PI to determine which projects the company should accept. ..... What is the Pl of project A? (Round to two decimal places.)
(Click on the following icon in order to copy its contents into a spreadsheet.) Year 1 Year 2 Year 3 Year 0 -$50 -$101 $26 $20 $22 $22 $39 $49 Project A B Year 4 $16 $62 You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): a. What are the IRRs of the two projects? b. If your discount rate is 5.2%, what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently?
Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%. Time Cash Flow 0 - $53,000 1 $ 21,000 2 $ 21,000 3 $ 21,000 NPV = Payback = Discounted Payback =
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 1 2 3 -$20,000 8,850 9,100 8,800 2 Instruction: Sketch the NPV profiles for X and Y over a range of discount rates from 0% to 25%. What is the crossover rate for these two projects (when both projects have the same NPV)? Show your steps. -$20,000 10,100 7,800 8,700 A▾ B I = 18 1
Consider the following two projects: Cash flows Project A Project B C0�0 −$ 240 −$ 240 C1�1 100 123 C2�2 100 123 C3�3 100 123 C4�4 100 a. If the opportunity cost of capital is 8%, which of these two projects would you accept (A, B, or both)? b. Suppose that you can choose only one of these two projects. Which would you choose? The discount rate is still 8%. c. Which one would you choose if the cost of capital is 16%? d. What is the payback period of each project? e. Is the project with the shortest payback period also the one with the highest NPV? f. What are the internal rates of return on the two projects? g. Does the IRR rule in this case give the same answer as NPV? h. If the opportunity cost of capital is 8%, what is the profitability index for each project? i. Is the project with the highest profitability index also the one with the highest NPV? j. Which measure should you use to choose between the projects?

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