[The following information applies to the questions displayed below.]Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The companyrequires a 3% return from its investments.Initial investmentNet cash flows:$ (220,000)Year 1160,000128,000125,000Year 2Year 3QS 11-19 (Algo) Net present value with unequal cash flows LO P3Compute this machine's net present value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tablesprovided. Round all present value factors to 4 decimal places. Round present value amounts to the nearest dollar.)Net Cash Flow Present Value Present Value of NetFactorCash FlowsYear 1Year 2Year 3TotalsInitial investmentNet present value

Net Present Value: Net present value (NPV) is the excess of present value of cash inflows over the…

[The following information applies to the questions displayed below.] Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 3% return from its investments. $ (220,000) Initial investment Net cash flows: Year 1 160,000 128,000 125,000 Year 2 Year 3 oS 11-19 (Algo) Net present value with unequal cash flows LO P3 ompute this machine's net present value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables rovided. Round all present value factors to 4 decimal places. Round present value amounts to the nearest dollar.) Net Cash Flow Present Value Factor Present Value of Net Cash Flows

[The following information applies to the questions displayed below.] Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 3% return from its investments. $ (220,000) Initial investment Net cash flows: Year 1 160,000 128,000 125,000 Year 2 Year 3 oS 11-19 (Algo) Net present value with unequal cash flows LO P3 ompute this machine's net present value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables rovided. Round all present value factors to 4 decimal places. Round present value amounts to the nearest dollar.) Net Cash Flow Present Value Factor Present Value of Net Cash Flows

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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st A company must install one of two systems to reduce costs. Both systems have useful lives of 5 years and no selvage value. The cash flows are summarized below. 5 IRR Year System A NCF, $ System C NCF, $ 0 -10,000 -13,500 3,000 3,000 3,000 3,500 3,000 4,000 3,000 4,500 3,000 5,000 3 1 2 15.2% 13.4% Assume the firm's MARR is 10%. Which project should be selected on the basis of the IRR criterion?
! Required information [The following information applies to the questions displayed below.] Following is information on an investment considered by Hudson Co. The investment has zero salvage value. The company requires a 6% return from its investments. Year 1 Year 2 Initial investment Expected net cash flows ins Year 1 Year 2 Year 3 Compute this investment's net present value. (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided. Round all present value factors to 4 decimal places.) Year 3 Totals Amount invested Net present value Investment Al $(390,000) Cash Flow 110,000 106,000 91,000 Present Value of 1 at 6% Present Value
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 29,800 012345 12,000 14,700 16,600 13,700 -10,200 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %
ces Duo Corporation is evaluating a project with the following cash flows: Year 0 Cash Flow -$ 29,100 -2345 1 11,300 14,000 15,900 13,000 -9,500 The company uses a discount rate of 12 percent and a reinvestment rate of 7 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR % c. Combination approach MIRR %
The following are the cash flows of two projects: Year 2234O 0 1 Project A $ (380) 210 210 210 210 Project B $ (380) 280 280 280 If the opportunity cost of capital is 11%, what is the profitability index for each project? Note: Do not round intermediate calculations. Round your answers to 4 decimal places. Project A B Answer is complete but not entirely correct. Profitability Index 1.7145 X 1.8006
IRR of an uneven cash flow stream) Microwave Oven Programming in comidering the construction of a new plant. The plant will have an intal cash oulay of 16 1 milion (= $61 milion) and will produce can fows of 57 9 month and of year 1, 157 milion at the end of your 2, and $15 million at the end of years 3 through 5 What is the internal cale of retam on th The Wd of the project is (ound to two decinal places)
(Related to Checkpoint 6.6) (Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: Investment Alternatives End of Year 1 2 3 4 5 6 $ 780 A $ 19,000 19,000 19,000 19,000 19,000 B $19,000 19,000 19,000 19,000 19.000 C $19,000 95,000 a. What is the present value of investment A at an annual discount rate of 23 percent? $ 53265.99 (Round to the nearest cent.) b. What is the present value of investment B at an annual discount rate of 23 percent? (Round to the nearest cent.) ..
Following is information on an investment considered by Hudson Co. The investment has zero salvage value. The company requires a 6% return from its investments. Investment A1Initial investment $ (250,000 )Expected net cash flows in: Year 1 165,000 Year 2 98,000 Year 3 91,000 Assume that instead of a zero salvage value, as shown above, the investment has a salvage value of $27,000. Compute the investment's net present value.
(Related to Checkpoint 6.6) (Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: End of Year 1 2 3 4 5 6 7 8 9 10 A $10,000 10,000 10,000 10,000 10,000 Investment Alternatives B $10,000 10,000 10,000 10,000 C $10,000 50,000 10,000 10,000 (Click on the icon in order to copy its contents into a spreadsheet.) Assuming an annual discount rate of 23 percent, find the present value of each investment. 10.000
ed Duo Corporation Year 012345 is evaluating a project with the following cash flows: Cash Flow -$28,800 11.000 13,700 15.600 12.700 -9,200 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % % 4
Mendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 2 3 $780 1,050 1,310 1,425 a. If the discount rate is 8 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 25 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Present value at 8% b. Present value at 17% c. Present value at 25%
Compute the internal rate of return for the cash flows of the following two projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Year Project A 0 -$13,800 Project B -$ 11,400 1 5,400 2,900 2 6,200 8,500 3 5,000 4,600 Project A Project B % %

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