Kara, Incorporated, imposes a payback cutoff of three years for its internationalinvestment projects.YearCash Flow (A)Cash Flow (B)0-$ 66,000-$76,000126,00018,00023434,00021,00024,00032,000236,00011,000What is the payback period for both projects? (Do not round intermediate calculationsand round your answers to 2 decimal places, e.g., 32.16.)Project AProjectyearsyears

Payback period: The amount of time to recover the cost of an investment project.The shorter…

Answered: Kara, Incorporated, imposes a payback…

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 firm evaluates all of its projects by applying the IRR rule. Year 0 1 2 3 Cash Flow -$ 149,000 67,000 72,000 56,000 What is the project's IRR? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Year Cash Flow (A) Cash Flow (B) 01234 -$40,000 14,000 18,000 17,000 11,000 -$ 55,000 11,000 13,000 16,000 255,000 What is the payback period for both projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project A Project B years years Which project should the company accept? O Project A Project B
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$350,000 −$35,000 1 25,000 17,000 2 70,000 11,000 3 70,000 17,000 4 430,000 11,000 Assume you require a 15 percent return on your investment and a payback of 4 years. a. If you apply the discounted payback criterion, which investment will you choose? Why? b. If you apply the NPV criterion, which investment will you choose? Why? c. Based on your answers in (a) and (b), what you can say anything about the IRR of both projects? which project will you finally choose? Why?
Mansukhbhai
1. Kara, Incorporated, imposes a payback cutoff of three international investment projects. Year Cash Flow (A)Cash Flow (B) -$ 73,000 0 1 2 3 4 $63,000 24,500 31,000 22,500 9,500 16,500 19,500 29,000 233,000 What is the payback period for both projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) What is the payback period for both projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Nikul
The following are the cash flows of two independent projects: Year Project A Project B 0 $ (270 ) $ (270 ) 1 150 170 2 150 170 3 150 170 4 150 a. If the opportunity cost of capital is 12%, calculate the NPV for both projects. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow (A) -$ 59,000 Cash Flow (B) 01234 24,000 31,400 26,000 12,000 -$ 104,000 26,000 31,000 28,000 236,000 a. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. Which, if either, of the projects should the company accept? a. Project A years Project B years b. Project acceptance Accept Project A and reject Project B
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 −$ 16,800 1 7,900 2 9,100 3 8,700 4 7,500 5 −4,900 The company uses an interest rate of 9 percent on all of its projects. Calculate the MIRR of the project using all three methods. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
Compute the internal rate of return for the cash flows of the following two projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Year Project A 0 -$13,800 Project B -$ 11,400 1 5,400 2,900 2 6,200 8,500 3 5,000 4,600 Project A Project B % %

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