Problem 1. Multiple-Choice (82 Q1. If you invest $14,000 now into a project that will yield net revenue of $1,763 at the end of each year for 12 years, what is the IRR of your investment? a) 15 % b) 10% c) 9% d) 12% ej 7% D None of the above 02 If you invest $10,000 now into a project that will yield net revenue of $1.560 at the end of each year for 12 years, what is the ERR of your investment if your reinvestment rate is 9% per year? a) 10% 6) 9% 8% d) 7% 065 012% ) None of
Problem 1. Multiple-Choice (82 Q1. If you invest $14,000 now into a project that will yield net revenue of $1,763 at the end of each year for 12 years, what is the IRR of your investment? a) 15 % b) 10% c) 9% d) 12% ej 7% D None of the above 02 If you invest $10,000 now into a project that will yield net revenue of $1.560 at the end of each year for 12 years, what is the ERR of your investment if your reinvestment rate is 9% per year? a) 10% 6) 9% 8% d) 7% 065 012% ) None of
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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Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
Question
Transcribed Image Text:Problem 1. Multiple-Choice (8 2
OLf you invest $14,000 now into a projeet that will yield net evenue of $1,763 at the end of each
year for 12 years, what is the IRK of your investment
a) 15 b) 10% )9% d) 12
ej 7%
D None of the above
02 it you invent $10,000 nuw into a project that will yield net tevenue of S1.560 the end of each
year for 12 years, what is the ERR of your investment if your reinvestment rate is 9% per year
a) 10% b) O d) 7% 06 012% None of the above
03. How much can you afford to pay for a 56,000 bond that pays 7% interest annually and will maturs
20 years hence if you desire to earn 10% on your investment?
a)54,319 b) $2,979.8 ) $2.7435 d) $6,000 )53,227 ) None of the above
Q4. A machine costs $40,000 and is expected to save $16,200 per year while in operation, If MARR -
20, what is the discounted payback period?
a)6 years b) 5 years c) 4 yeap d) 3 years e) 7 years ) None of the above
Q5. A piece of equipment is purchased for $20,000, will generate revenues of $4,000 per year for 10
yean, and have a salvage value of $2,000. If MARR 12%, find the equivalent annual capital recovery
amount (CR).
a)$4,127 b) $3,426 c) $2,723 d) $4,919 ) $4,000 None of the above
06, Using the present worth (PW) method and
a MARR of 12% per year, is the investment
proposal shown in the table acceptable?
End of Year
2.
4.
2,100 2,100 2100 51G
Net cash
flow (S)
-8,500
a) No, because PW -5215 b) No, because PW--S612.3 c) Yes, and PW -S1,122
d) Yes, and PW-$1,476
e) Yes, and PW-5312
1 None of the above
07. Your company has purchased new equipment for S100,000. An additional $20,000 has been
charged for shipping and handling. The equipment has a useful life of 10 years and a salvage value of
$30,000 Using the straight-line method, what is the depreciation amount during the second year?
a) 59,000 b) S8,000 )$10,000 d) S11,000
c) S12,000
O None of the above
Q8. If the equipment of Q7 above is depreciated using the 200%-declining balance method (DDB),
what would be its book value (BV) at the beginning of year two?
a) $110,000 b) S117,600 c) $80,000 d) $96,000
e) None of the above
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