the discount rate is 10%, the net present value of project b? 3. The payback period pf project C? 4. If the discount rate is 5% and the discounted payback period of project D is exactly 2yrs, then year 2 cash inflow for project D is?
the discount rate is 10%, the net present value of project b? 3. The payback period pf project C? 4. If the discount rate is 5% and the discounted payback period of project D is exactly 2yrs, then year 2 cash inflow for project D is?
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
Related questions
Question
2. If the discount rate is 10%, the net present value of project b?
3. The payback period pf project C?
4. If the discount rate is 5% and the discounted payback period of project D is exactly 2yrs, then year 2 cash inflow for project D is?
Transcribed Image Text:An organization has four investment proposals with the following costs and
expected cash inflows:
Expected cash inflows
End of
End of
End of
Year 2
Year 3
Project
A
Cost
Year 1
10,000
10,000
10,000
Unknown
10,000
15,000
5,000
20,000
Unknown
20,000
25,000
30,000
10,000
5,000
15,000
20,000
Additional Information
Present Value of P1
Present value of an
Discount Number of
Periods
Annuity of P1 per Periods
for n Periods (PVIFA)
0.9524
Due at the End of
Rate
n Periods (PVIF)
5%
0.9524
5%
0.9070
1.8594
5%
3
0.8638
2.7232
10%
0.9091
0.9091
10%
2
0.8264
1.7355
3
0.7513
2.4869
10%
0.8696
0.8696
15%
0.7561
1.6257
15%
0.6575
2.2832
15%
If Project A has an internal rate of return (IRR) of 15%, it has a cost of
IBCD
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