(RR of an uneven cash flow stream) Microwave Oven Programming, Inc is considering the construction of a new and will produce cash flows of $2.1 milion at the end of year 1, $4.9 milion at the end of year 2, and $1.9 million at the end of years plant. The plant The IRR of the project is % (Round to two decimal places) will have an initial cash outlay of is the internal 5. What (=-$7.3 rate of return on this new plant? $7.3 million milion) 3 through

(RR of an uneven cash flow stream) Microwave Oven Programming, Inc is considering the construction of a new and will produce cash flows of $2.1 milion at the end of year 1, $4.9 milion at the end of year 2, and $1.9 million at the end of years plant. The plant The IRR of the project is % (Round to two decimal places) will have an initial cash outlay of is the internal 5. What (=-$7.3 rate of return on this new plant? $7.3 million milion) 3 through

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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The management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment: Year Cash Outflow Cash Inflow $1,905,000 $105,000 555,000 200,000 360,000 475,000 515,000 605,000 595,000 305,000 250,000 250,000 A. What is the payback period of this uneven cash flow? Round your answer to 2 decimal places. 1 2 3 4 5 6 7 8 9 10 years B. Does your answer change if year 10's cash inflow changes to $500,000? The answer for part A if the cash inflow in year 10 changes to $500,000.
Stern Associates is considering a project that has the following cash flow data. What is the project's payback? Year 0 1 2 3 4 5 Cash flows -$950 $380 $390 $400 $410 $420 a. 3.45 years b. 1.55 years c. 2.45 years d. 2.55 years e. 1.23 years
BECL Ltd is considering a project, which will involve the following cash inflows and (out)flows: $000 Initial Outlay (400) After 1 year 40 After 2 years 300 After 3 years 300 What will be the NPV (net present value) of this project if a discount rate of 15% is used? a. -$60.8k b. $460.8k c. $240k d. $60.8k
Resnick Inc. is considering a project that has the following cash flow data. What is the project's payback? Year Cash flows O a. 1.44 years O b. 2.08 years O c. 2.92 years O d. 1.54 years e. 2.54 years O 0 -$500 $240 2 $240 3 $240
FB Company is considering investing in two construction projects, and he developed the following estimates of the cash flows. His required return is 10% and views these projects as equally risky. Year Project 1 cash flow project 2 cash flow 0 -550000 -700000 1 150000 200000 2 200000 150000 3 150000 250000 4 150000 150000 5 100000 150000 Required: a) Calculate the net present value (NPV) of each project, assess its acceptability, and indicate which project is best using NPV. b) Calculate the profitability index (PI) of each project, assess its acceptability, and indicate which project is best using PI. c) If both the projects have recorded a positive NPV value and the projects are mutually exclusive, which projects would you recommend for FB Company to undertake? Why?
A project has the following cash flows: Year Cash Flow 0 $ 37,000 1 -18,000 227,000 What is the IRR for this project? (Round the final answer to 2 decimal places.) IRR % What is the NPV of this project, if the required return is 11% ? ( Negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ What is the NPV of the project if the required return is 0% ? ( Negative answer should be indicated by a minus sign. Omit $ sign in your response.) NPV $ What is the NPV of the project if the required return is 22 % ? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $
Darius Inc. is considering a project that has the following cash flow data. Given WACC = 10%, what is the project's NPV? Year 0 = $-100,000 Year 1 = $45,000 Year 2 = $10,000 Year 3 = $0 Year 4 = $50,000 Year 5 = $15,000 Question 2Answer a. $0 b. $2,321.10 c. $1.20 d. $-7,361.95 e. $-1,230.18 f. $-524.23
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Datta Computer Systems is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected. Year Cash flows O 7.93% 8.31% 9.46% 9.94% 9.55% -$1,175 $450 $470 دیا $490
Beta Corporation is considering investing in one of twomachines – Machine A or Machine B. The initial cost and net cash inflows from each project are shown below. The opportunity cost for both projects is 14% per cent. Cash Flow Machine A Machine B $ $ Initial Cost 6 500 000 5 000 000 Net Cash Inflows Year 1 1 000 000 1 400 000 Year 2 1 300 000 1 600 000 Year 3 1 300 000 1 600 000 Year 4 1 200 000 1 600 000 Year 5 1 200 000 1 200 000 Year 6 1,400,000 1,000,000 Discount factor table Year 10% 12% 14% 1 0.9091 0.8929 0.8772 2 0.8264 0.7972 0.7695 3 0.7513 0.7118 0.6750 4 0.6380 0.6355 0.5921 5 0.6209 0.5674 0.5194 6 0.5645 0.5066 0.4556 Required: a. Calculate the payback period for each machine.…
The table below shows actual cash flows of a project for XYZ LLC. If the real interest rate is 5% and inflation rate is 3%, calculate the Constant Dollar NPW for the project. Should the project be funded based on the NPW calculated? ΕΟΥ Cash Flow -$60,000 1 $25,000 2 $23,000 3 $21,000 Question 6 Part C: Provide the Constant Dollar NPW for this project. Enter your answer in the form: 1234.56
Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $234,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Net cash flows Project C1 Project C2 Year 1 $ 14,000 $ 98,000 Year 2 110,000 98,000 Year 3 170,000 98,000 Totals $ 294,000 $ 294,000 a. The company requires a 10% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted.b. Using the answer from part a, is the internal rate of return higher or lower than 10% for (i) Project C1 and (ii) Project C2? Hint: It is not necessary to compute IRR to answer this question.

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