Problem 5-5 Calculating IRRA firm has a project with the following cash flows:Year00723.1Cash Flow-$ 28,40012,40015,40011,400The appropriate discount rate is 15 percent. What is the IRR for this project? (Do notround intermediate calculations and enter your answer as a percent rounded to 2decimal places, e.g., 32.16.)IRR%Should the firm accept the project?AcceptO Reject

Internal rate of return (IRR) is the rate at which present value of future cash flows will be equal…

Answered: Problem 5-5 Calculating IRR A firm has…

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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Consider the following two projects: Cash flows Project A Project B C0�0 −$ 240 −$ 240 C1�1 100 123 C2�2 100 123 C3�3 100 123 C4�4 100 a. If the opportunity cost of capital is 8%, which of these two projects would you accept (A, B, or both)? b. Suppose that you can choose only one of these two projects. Which would you choose? The discount rate is still 8%. c. Which one would you choose if the cost of capital is 16%? d. What is the payback period of each project? e. Is the project with the shortest payback period also the one with the highest NPV? f. What are the internal rates of return on the two projects? g. Does the IRR rule in this case give the same answer as NPV? h. If the opportunity cost of capital is 8%, what is the profitability index for each project? i. Is the project with the highest profitability index also the one with the highest NPV? j. Which measure should you use to choose between the projects?
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QUESTION 10 A company is considering two mutually exclusive projects that have the following cash flows: Project A Project B Year 0 1 2 3 4 Cash Flow -$10,000 1,000 2,000 6,000 6,000 Cash Flow $8,000 7,000 1,000 1,000 1,000 If the company's required rate of return is 10%, find the project's NPV, IRR, PI, and payback period. Which project they should invest in? B because it has the highest IRR of 15.71% O Abecause it has the highest Pl of 1 12 QUESTION 11 A because it has the highest NPV of 1,167 95 OB becasue it has the lowest payback of 2 years
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CENGAGE MINDTAP Week 6 Homework Your division is considering two projects with the following cash flows (in millions): 0 2 1 % Project A -$20 Project B -$13 a. What are the projects' NPVs assuming the WACC is 5%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places. Project A: $ million million Project B: $ What are the projects' NPVs assuming the WACC is 10%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places. Project A: $ million Project B: $ million What are the projects' NPVs assuming the WACC is 15%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values,…
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Your company has a project available with the following cash flows: Year 0 1 2345 Cash Flow -$80,900 21,600 25,200 31,000 26,100 20,000 If the required return is 15 percent, should the project be accepted based on the IRR?
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