Q5. Consider the investment projects given in the following table:Net Cash FlownProject AProject BProject C- $100- S150- $101305041025050-55835025245021.11%Assume that MARR = 12% in the following questions:IRR23.24%20%, 40%, 50%Identify simple and non-simple projects.Identify pure and mixed investments.Determine the IRR for Project C.(Hint: You can use trial-error method followed by linear interpolation.)Which project(s) is(are) acceptable?b)c)d)

Simple projects are where the cash outflow is done at an initial stage and there is only one sign…

Q5. Consider the investment projects given in the following table: Net Cash Flow Project A Project B Project C - $100 - S150 - $10 1 30 50 410 2 50 50 -558 3 50 252 50 IRR 23.24% 21.11% 20%, 40%, 50% Assume that MARR = 12% in the following questions: Identify simple and non-simple projects. Identify pure and mixed investments. Determine the IRR for Project C. (Hint: You can use trial-error method followed by linear interpolation.)

Q5. Consider the investment projects given in the following table: Net Cash Flow Project A Project B Project C - $100 - S150 - $10 1 30 50 410 2 50 50 -558 3 50 252 50 IRR 23.24% 21.11% 20%, 40%, 50% Assume that MARR = 12% in the following questions: Identify simple and non-simple projects. Identify pure and mixed investments. Determine the IRR for Project C. (Hint: You can use trial-error method followed by linear interpolation.)

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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7) Consider the following project: Year Cash Flow 0 – $ 3,024 1 17,172 2 – 36,420 3 34,200 4 – 12,000 Year Cash Flow 0 -3,024 1 17,172 2 -36,420 3 34,200 4 -12,000 a) Determine the IRR (s) for this project. Do not use Excel sheet b) At which rates of return will the project be acceptable?
Consider the following two sets of project cash flows:Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6DiscountRateX -903 175.6 169.8 201.4 251.5 299.2 305.2 0.1037Y -513 190.5 195.5 90.5 80.5 85.5 110.5 0.1037A) Assume that projects X and Y are mutually exclusive. The correct investment decision andthe best rational for that decision is to:i) invest in Project Y since IRRY > IRRX.ii) invest in Project Y since NPVY > NPVX.iii) neither of the above.B) What are the incremental IRR and NPV of Project X?C) Is the use of the incremental measures in B) appropriate to your evaluation of thepreferred project? Explain.D) Which is the preferred project? Explain and justify the basis for your choice.(6 marks)2) Due to the demands of the new ATO Single Tough Reporting System, a successful manufacturingcompany is assessing the introduction of a new computer system to improve regulatory reportingcompliance. The managing director wants to install a new Pay Perfect system, whereas the…
Consider two mutually exclusive projects, A and B, whose costs and cash flows areshown in the following table:Year Project A Project B1 $(14,000) $(22,840)2 8,000 8,0003 6,000 8,0004 2,000 8,0005 3,000 8,000Calculate the cross over rate. Please use equations and not excel
12
8. You have to choose between two mutually exclusive investments: Project A B Co C₁ -200 250 -300 360 a. Calculate the IRR for each project. Which project would you choose based on the IRR rule? b. Which project would you choose based on the NPV rule? Consider the following two scenarios for the cost of capital: i. Assume that the cost of capital is 6%. ii. Assume that the cost of capital is 16%. c. For what range of values for the cost of capital would you choose project A and for what range of values for the cost of capital would you choose project B? Briefly motivate your answer.
You are given the following cash flow information for a project. Given this information, and assuming that the correct risk-adjusted discount rate (WACC) to use is 14 percent, while the firm's true reinvestment rate is 23 percent, determine the modified net present value (MNPV) for this project. Year 0 1 2 3 4 5 O $20,408 O $22,162 O $21.277 $21,728 O$20,883 Cash Flow -$20,000.00 $16,000.00 $10,000.00 $15,000.00 $16,000.00 $17,000.00
attached
A firm is considering the following independent projects. Project Investment Present value offuture cash flows NPV A $130 $176 $46 B $103 $115 $12 C $183 $287 $104 D $161 $199 $38 E $184 $273 $89 What is the Profitability Index of Project B? Question 5Answer a. 0.85 b. 1.12 c. 0.89 d. 1.18
Consider two mutually exclusive projects A and B: Cash Flows (dollars) Project Co A -39,500 B -59,500 C₁ 28,600 42,500 C₂ NPV at 11% 28,600 +$ 9,478 42,500 +13,282 a. Calculate IRRS for A and B. Note: Do not round intermediate calculations. Enter your answers as a perc Project A B IRR % % b. Which project does the IRR rule suggest is best? Project A Project B c. Which project is really best? Project A Project B P
Consider two investments A and B with the following sequences of cash flows: Net Cash Flow n Project A Project B 0 -$120,000 -$100,000 1 20,000 15,000 2 20,000 15,000 3 120,000 130,000 (a) Compute the IRR for each investment. (b) At MARR = 15%, determine the acceptability of each project. (c) If A and B are mutually exclusive projects, which project would you select, based on the rate of return on incremental investment?
You are given the following information about the cash flows for Projects A and B: Project B $12,643.00 $6,264.00 $5.119.00 $4,284.00 $3,265.00 $2,884.00 Year 0 1 2 3 4 5 Given this information, and assuming a risk-adjusted discount rate of 14.0 percent for both projects, determine the internal rate of return (IRR) for the project with the highest net present value (NPV). 26.0818% 25.6301% 25.1784% Project A -$10,356.00 $2,185.00 $4,294.00 $4,642.00 $6,360.00 $3,125.00 O24.2750%
onsider the following projects: Project Cash Flows ($) C0�0 C1�1 C2�2 C3�3 C4�4 C5�5 A −2,600 2,600 0 0 0 0 B −5,200 2,600 2,600 5,600 2,600 2,600 C −6,500 2,600 2,500 0 2,600 2,600 If the opportunity cost of capital is 10%, which project(s) have a positive NPV? Calculate the payback period for each project. Which project(s) would a firm using the payback rule accept if the cutoff period is three years?

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