Net Cash Flows and NPVs for different discount rate for projects S and L are given below Net Cash Flows ($) Discount Rate (%) NPVS NPVL Year (t) Project S Project L 0% $800 $1100 0 $(3000) $(3000) 5 554.32 1 1500 400 10 161.33 2 1200 900 15 (90.74) (259.24) 3 800 1300 20 (309.03) (565.97) 4 300 1500 e) What is the IRR for L? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR Equation: Answer: f) What is the cross-over rate? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR Equation: ANSMER:
Net Cash Flows and NPVs for different discount rate for projects S and L are given below Net Cash Flows ($) Discount Rate (%) NPVS NPVL Year (t) Project S Project L 0% $800 $1100 0 $(3000) $(3000) 5 554.32 1 1500 400 10 161.33 2 1200 900 15 (90.74) (259.24) 3 800 1300 20 (309.03) (565.97) 4 300 1500 e) What is the IRR for L? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR Equation: Answer: f) What is the cross-over rate? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR Equation: ANSMER:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Net Cash Flows and NPVs for different discount rate for projects S and L are given below
|
|
Net Cash Flows ($) |
|
Discount Rate (%) |
NPVS |
NPVL |
|
|
Year (t) |
Project S |
Project L |
|
0% |
$800 |
$1100 |
|
0 |
$(3000) |
$(3000) |
|
5 |
|
554.32 |
|
1 |
1500 |
400 |
|
10 |
161.33 |
|
|
2 |
1200 |
900 |
|
15 |
(90.74) |
(259.24) |
|
3 |
800 |
1300 |
|
20 |
(309.03) |
(565.97) |
|
4 |
300 |
1500 |
|
|
|
|
- e) What is the
IRR for L? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR
Equation:
Answer:
- f) What is the cross-over rate? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR
Equation:
ANSMER:
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