Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? WACC: 10.75% Year 0 1 2 3 4 Cash flows -$975 $650 $610 $570 $530 a. 1.22 years b. 2.78 years c. 1.78 years d. 2.22 years e. 1.11 years Moerdyk & Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the one with the higher IRR will also have the higher NPV, i.e., no conflict will exist. WACC: 8.75% 0 1 2 3 4 CFS -$775 $550 $390 $230 $70 CFL -$775 $115 $275 $435 $595 a. $0.00 b. $37.51 c. $34.49 d. $128.69 e. $40.79
Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? WACC: 10.75% Year 0 1 2 3 4 Cash flows -$975 $650 $610 $570 $530 a. 1.22 years b. 2.78 years c. 1.78 years d. 2.22 years e. 1.11 years Moerdyk & Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the one with the higher IRR will also have the higher NPV, i.e., no conflict will exist. WACC: 8.75% 0 1 2 3 4 CFS -$775 $550 $390 $230 $70 CFL -$775 $115 $275 $435 $595 a. $0.00 b. $37.51 c. $34.49 d. $128.69 e. $40.79
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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Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?
| WACC: | 10.75% | ||||
| Year | 0 | 1 | 2 | 3 | 4 |
| Cash flows | -$975 | $650 | $610 | $570 | $530 |
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Moerdyk & Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the one with the higher IRR will also have the higher NPV, i.e., no conflict will exist.
| WACC: | 8.75% | ||||
| 0 | 1 | 2 | 3 | 4 | |
| CFS | -$775 | $550 | $390 | $230 | $70 |
| CFL | -$775 | $115 | $275 | $435 | $595 |
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