The going rate of interest for a savings account is 8% percent and the expected profit rate is 5% percent for a project the firm is thinkingof doing. The opportunity cost of a firm carrying out that $300,000 project for one year with its own funds instead of putting it in asavings account would pe_It cannot be determined with the given information.$15,000O $9,000O $24,000

Step 1: Calculate the interest earned on $300,000 in the savings account.Interest earned on…

Answered: The going rate of interest for a…

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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Consider the following projects: Year 0 Year 1 Year 2 Year 3 Year 4 Discount Rate Cash Flow A -100 30 20 40 B -73 25 20 20 C -27 10 9 9 13= 60 14.50% 45 15.00% 11 14.00% a. Find the NPV of the projects, will you accept/reject them? b. What is the IRR of the projects, will you accept/reject? c. If the firm had $250 to invest today, what project(s) should it pursue? d. If the firm only had $100 to invest today, what project(s) should it pursue?
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 13 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: −$255,000 $61,800 $80,000 $133,000 $118,000 $77,200 Use the MIRR decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Should this be Accepted or Rejected
Please correct answer thes question
A project has the following cash flow n 0 1 2 3 Cash flow -25,000 0 X X What is the value of X that will result in 15% rate of return?
You have an opportunity to invest $104,000 now in return for $79,800 in one year and $29,600 in two years. If your cost of capital is 9.2%, what is the NPV of this investment? Question content area bottom Part 1 The NPV will be $XX enter your response here . (Round to the nearest cent.)
How did you find this amount because thourgh Excel spreeshit it gives another sum Now, let's address Rhule's concern about the cost of capital being off 300 basis points (3%): If the cost of capital is off by 300 basis points (10% -3% = 7%), we would recalculate the NPV using the new discount rate of 7% and check if the project still yields a positive NPV. NPV (at 7 %) = [( $6.77 million * ((1 - (1 + 0.07)^(- 10)) / 0.07)] - $16.5 million NPV (at 7%) = [$6.77 million * (1 - 0.508) / 0.07] - $16.5 million NPV (at 7%) = [$ 6.77 million *0.492/0.07] - $16.5 million Explanation: NPV (at 7%) = $34.6512 million - $16.5 million NPV ( at 7%) = $18.1512 million With a cost of capital of 7%, the NPV of the project is still positive at $18.1512 million. This indicates that even if the cost of capital is off by 300 basis points (3%), the project remains financially feasible and attractive.:;
Not Using Excel You must find the payback for a project, and you have misplaced some of the information that you weregiven. You know that the project will generate positive cash flows of $60,000 per year at the end of each ofthe next 5 years, that its NPV is $75,000, and that the company's WACC is 10%. What is the project's regularpayback? Hint: You must first find the project's cost, then use it to find the payback.
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. Time: 0 1 2 3 4 5 Cash flow -$238,000 $66,100 $84,300 $141,300 $122,300 $81,500 Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Discounted payback Should it be accepted or rejected? O Rejected O Accepted years
I need this question completed in 10 minutes
Explain well with proper answer.
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 10 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively. Time: 0 1 2 3 4 5 Cash flow: -S 245,000 $ 66,800 $ 85,000 $ 142,000 $ 123,000 $ 82, 200 Use the Pl decision rule to evaluate this project. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Should it be accepted or rejected? (Click to select)
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 13 percent, and that the maximum allowable payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively. Time: 0 1 2 3 4 5 Cash flow: −$ 225,000 $ 64,800 $ 83,000 $ 140,000 $ 121,000 $ 80,200 Use the IRR decision rule to evaluate this project. Note: Do not round intermediate calculations and round your final answer to 2 decimal places.

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