Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.0 and 3.0 years, respectively. Time: Cash flow: 5 -$ 4,700 $ 1,130 $ 2,330 $1,530 $ 1,530 $ 1,330 Use the discounted payback decision rule to evaluate this project. Note: Round your answer to 2 decimal places. Discounted payback Should it be accepted or rejected? (Click to select) years $ 1,130

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.0 and 3.0 years, respectively. Time: Cash flow: 5 -$ 4,700 $ 1,130 $ 2,330 $1,530 $ 1,530 $ 1,330 Use the discounted payback decision rule to evaluate this project. Note: Round your answer to 2 decimal places. Discounted payback Should it be accepted or rejected? (Click to select) years $ 1,130

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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Similar questions

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: –$4,800 $1,210 $2,410 $1,610 $1,530 $1,410 $1,210 Use the payback decision rule to evaluate this project.
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: −$5,300 $1,190 $2,390 $1,590 $1,590 $1,390 $1,190 Use the IRR decision rule to evaluate this project. IRR ________%
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively. 18 Ints Time: 1 4 5 Cash flow: $66, 400 $84,600 $141,600 $122,600 $81,800 $351,000 Print Use the NPV decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) References NPV Should it be accepted or rejected? accepted O rejected
Compute the discounted payback statistic for Project D and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 percent and the maximum allowable discounted payback is four years. Time 0 1 2 3 4 5 Cash flow -$11000 $3350 $4180 $1520 $300 $1000
Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome being equally likely. The initial investment required for the project is $80,000, and the project's cost of capital is 15%. The risk-free interest rate is 5%. a. Assume that to raise the funds for the initial investment the firm borrows $80,000 at the risk-free rate, calculate the value of the firm's levered equity. b. Assume that to raise the funds for the initial investment the firm borrows $30,000 at the risk-free rate and issues new equity to cover the remainder. Suppose we end up with a weak economy one year from now. What will be the cash flow that equity holders receive?
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively. Time: 0 1 2 3 4 5 Cash flow: −$260,000 $60,800 $79,000 $131,000 $117,000 $76,200 Use the MIRR decision rule to evaluate this project.
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.0 and 3.0 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: -$7,300 $1,160 $2,360 $1,560 $1,560 $1,360 $1,160 Use the Pl decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) PI 0.94 Should it be accepted or rejected? O rejected O accepted
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
Find the profitability index of a project with the following cash flows using a discount rate of 4%: Period 0: -1000 Period 1: 793 Period 2: 391 Period 3: 204 Round your answer to the nearest one-hundredth.
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: Cash flow: 2 3 -$5,300 $1,1908 $2,390 $1,590 $1,590 $1,390 $1,190 Use the IRR decision rule to evaluate this project. (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.) IRR %
es Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively. Time: 0 1 2 3 4 5 Cash flow: -$295,000 $45,800 $64,000 $101,000 $102,000 $61,200 Use the MIRR decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) MIRR %
What would be the interest rate that would allow you to convert an investment from B/.5,000 to B/.20,227.79 in 10 years? (NOTE: Do this problem ONLY with Conversion Factor and the corresponding Excel Financial Function and remember to confirm your answer with the corresponding Cash Flow Table)

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