Part 1The aggregated cash flows, in dollars, for each of the two alternatives are given in the table below.Relative Cash Flows compared to current operationsfor year 0 and the first two yearsYear OYear 1Year 2Alternative 1 -592020+269100+538200Alternative 2 -627003+538200 +269100MitMart is currently using a discount rate of 10% to evaluate all proposed projects.What is the payback period for each of the two alternatives?

A financial term called the payback period shows how long it takes for an investment to produce…

Part 1 The aggregated cash flows, in dollars, for each of the two alternatives are given in the table below. Relative Cash Flows compared to current operations for year 0 and the first two years Year 0 Year 1 Year 2 Alternative 1 -592020 +269100 +538200 Alternative 2 -627003 +538200 +269100 MitMart is currently using a discount rate of 10% to evaluate all proposed projects. What is the payback period for each of the two alternatives?

Part 1 The aggregated cash flows, in dollars, for each of the two alternatives are given in the table below. Relative Cash Flows compared to current operations for year 0 and the first two years Year 0 Year 1 Year 2 Alternative 1 -592020 +269100 +538200 Alternative 2 -627003 +538200 +269100 MitMart is currently using a discount rate of 10% to evaluate all proposed projects. What is the payback period for each of the two alternatives?

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 project has the following cash flows: Year Cash Flow 0 - 25,400 1 11,620 2 13,810 3 -5, 550 4 7,310 The discounting rate is 13% and the reinvestment rate is 15%. What is the MIRR for this project using the combination approach?
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Mendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 2 3 $780 1,050 1,310 1,425 a. If the discount rate is 8 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 25 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Present value at 8% b. Present value at 17% c. Present value at 25%
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 % %
The following are the cash flows of two projects: Year 0 1 2 3 4 Project A $ (220) 100 100 100 100 Project B $ (220) 120 120 120 What are the internal rates of return on projects A and B? Note: Enter your answers as a percent rounded to 2 decimal places. Project A B IRR % %
Here are the expected cash flows for three projects: Cash Flows (dollars) Year 2 Project A C Year 8 -6,588 -2,580 -6,500 Year 1 +1,375 +1,375 +2,588 +1,375 +1,375 Year 3 +3,758 +2,758 +3,750 Year 4 8 +3,750 +5,758 a. What is the payback period on each of the projects? b. If you use the payback rule with a cutoff period of 2 years, which projects will you accept? c. If you use a cutoff period of 3 years, which projects will you accept? d-1. If the opportunity cost of capital is 12%, calculate the NPV for projects A, B, and C. Note: Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. d-2. Which projects have positive NPVs? e. "Payback gives too much weight to cash flows that occur after the cutoff date." True or false? a. Payback period b. If you use the payback rule with a cutoff period of 2 years, which projects will you accept? c. If you use a cutoff period of 3 years, which projects will you accept?…
Mendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,150 2 1,030 3 1,520 4 1,880 If the discount rate is 11 percent, what is the present value of these cash flows? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. What is the present value at 16 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. What is the present value at 22 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows: Project A Cash Flow Project B Cash Flow $(102,000) Year 0 1 2340 5 $(102,000) 35,000 35,000 35,000 35,000 35,000 0 0 0 0 230,000 (Click on the icon in order to copy its contents into a spreadsheet) If the appropriate discount rate on these projects is 12 percent, which would be chosen and why? The NPV of Project A is S. (Round to the nearest cent.)
Doak Corporation is evaluating a project with the following cash flows: Year 0 1 2 Cash Flow -$ 53,000 16,700 21,900 27,300 20,400 -8,600 The company uses an interest rate of 10 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. Discounting approach Reinvestment approach. Combination approach Sover 17.00 % % %
answer must be correct
Annual cash inflows from two competing investment projects are given below: Investment A $ 4,000 5,000 6,000 7,000 $ 22,000 Year 1234 The discount rate is 10%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: Compute the present value of the cash inflows for each investment. Year 1 2 3 4 $ Investment B $ 7,000 6,000 5,000 4,000 $ 22,000 Present Value of Cash Flows Investment A 0 $ Investment B 0 M ...
Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback period? WACC: 10.00% Year 0 1 2 3 4 Cash flows -$750 $525 $485 $445 $405 2.44 years 1.68 years 1.80 years 1.99 years 2.22 years

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