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QUESTIONS THREE You are a financial Analyst for Bandari Limited. The director of capital budgeting has asked you to analyze two proposed capital investments , project a X and Y. Each project has a cost of $ 10,000 and the cost of capital for each each project is 12%. The projects expected net cash flow are as follows YEAR PROJECT X PRJECT Y 0 (10,000) (10,000) 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500 For each Project, estimate; (a) Regular pay back period (b) NPV (c) MIRR (d) IRR (e) Cross over rate (f) NPV for each project using the Cross over rate estimated in part (e) (g) Assumed re-investment rate based on (i) IRR assumption (ii) NPV assumption

QUESTIONS THREE You are a financial Analyst for Bandari Limited. The director of capital budgeting has asked you to analyze two proposed capital investments , project a X and Y. Each project has a cost of $ 10,000 and the cost of capital for each each project is 12%. The projects expected net cash flow are as follows YEAR PROJECT X PRJECT Y 0 (10,000) (10,000) 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500 For each Project, estimate; (a) Regular pay back period (b) NPV (c) MIRR (d) IRR (e) Cross over rate (f) NPV for each project using the Cross over rate estimated in part (e) (g) Assumed re-investment rate based on (i) IRR assumption (ii) NPV assumption

Essentials Of Investments
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
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QUESTIONS THREE
You are a financial Analyst for Bandari Limited. The director of capital budgeting has asked you
to analyze two proposed capital investments , project a X and Y. Each project has a cost of $
10,000 and the cost of capital for each each project is 12%. The projects expected net cash flow
are as follows
YEAR PROJECT X PRJECT Y
0 (10,000) (10,000)
1 6,500 3,500
2 3,000 3,500
3 3,000 3,500
4 1,000 3,500
For each Project, estimate;
(a) Regular pay back period
(b) NPV
(c) MIRR
(d) IRR
(e) Cross over rate
(f) NPV for each project using the Cross over rate estimated in part (e)
(g) Assumed re-investment rate based on
(i) IRR assumption
(ii) NPV assumption

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