The MARR = 12% per year. The reinvestment rate, € = 8%. Use External Rate of Return (ERR)method for feasibility check.$1,500 $1,500 $1,500 $1,500 $1,5005678End of Year$5,000Internal rate of return (IRR) of the project is equal to ..External rate of return (ERR) of the project is equal toThis project is selected/not selected because ...SOLUTION:

Internal rate of return (IRR) excludes the external factors such as inflation, risk-free rate, cost…

The MARR = 12% per year. The reinvestment rate, € = 8%. Use External Rate of Return (ERR) method for feasibility check. $1,500 $1,500 S1,500 $1,500 $1,500 5 6 8 4 End of Year $5,000 Internal rate of return (IRR) of the project is equal to External rate of return (ERR) of the project is equal to This project is selected/not selected because .... .......

The MARR = 12% per year. The reinvestment rate, € = 8%. Use External Rate of Return (ERR) method for feasibility check. $1,500 $1,500 S1,500 $1,500 $1,500 5 6 8 4 End of Year $5,000 Internal rate of return (IRR) of the project is equal to External rate of return (ERR) of the project is equal to This project is selected/not selected because .... .......

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

7) Consider the following project: Year Cash Flow 0 – $ 3,024 1 17,172 2 – 36,420 3 34,200 4 – 12,000 Year Cash Flow 0 -3,024 1 17,172 2 -36,420 3 34,200 4 -12,000 a) Determine the IRR (s) for this project. Do not use Excel sheet b) At which rates of return will the project be acceptable?
Calculate the:Net Present Value (NPV) of the investment and comment on the viability of the investment project. The annual incremental profits/ (losses) relating to the investment are estimated as follows: Years CF’s (000) Year 0 -175,000 Year 1 K11,000 Year 2 K3,000 Year 3 K34,000 Year 4 K47,000 Year 5 K8,000 Investment at the start of the project would be K175, 000,000.the investment sum assuming nil disposal value after five years, would be written off using the equal instalment method. The depreciation has been included in the profit estimates above, which should be assumed to arise at each year end. Assume the cost of Capital is 12% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 D.f 1.00 0.893 0.797 0.712 0.636 0.567
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
Calculate the following project, at cost of capital of 10% Years Cash Flow (RM) 0 -10,000 1 2000 2 2000 3 4000 4 4000 5 5000 i) calculate NPV ii) calculate PI iii) Justified should we accept or reject the project?
Given the following cash flows for project X and project Y, Year Project X Project Y 0 -55000 -100000 1 20000 15000 2 13500 17000 3 11000 19000 4 10000 25000 5 9000 30000 6 7500 35000 Calculate the NPV, IRR, MIRR and traditional payback period for each project, assuming a required rate of return of 7 percent If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected? (Answer in word form please)
I need the answer as soon as possible
A project has cash flows of –$148,000, $43,000, $87,000, and $51,500 for Years 0 to 3, respectively. The required rate of return is 11 percent. Based on the internal rate of return of Blank 1 percent for this project, you should Blank 2 the project. Enter your answer in the first blank as a percent rounded to 2 decimal places, e.g., 32.16. Also enter either "accept" or "reject" in the second blank.
You are assigned to calculate IRR for Sur Project with life of 8 years. You know that for the Sur project NPV @11% is OMR 25816 (positive) while NPV @ 12% is –OMR 5788(negative). The initial investment for this project is OMR 85000.The cost of capital for this project is 11%. What is the IRR (rounded to two decimal places) for the Sur Project? A. 11.82% B. 12.29% C. 12.82% D. 10.18%
Payback period. Given the cash flow of two projects-A and B-in the following table, and using the payback period decision model, which project(s) do you accept and which proje period for recapturing the initial cash outflow? For payback period calp What is the payback period for project A? 6 Data Table - X years (Round to one decimal place.) (Click on the following icon D in order to copy its contents into a spreadsheet.) Cash Flow B. Cost Cash flow year 1 Cash flow year 2 Cash flow year 3 Cash flow year 4 Cash flow year 5 Cash flow $12,000 $6,000 $6,000 $6,000 $100,000 $20,000 $10,000 $40,000 $6,000 $30,000 SO $6,000 $6,000 year 6. SO Print Done
You are asked to evaluate two projects X and Y. The cash flow for each is listed below. The firmAc€?cs cost of capital is 12%. Year X Y 0 (10,000) (10,000) 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500 Calculate the NPV of each project? [rounded to the nearest tens] Which project would you select? c) Compute the IRR for project X. [up to two decimal places] Based on the IRR criterion, should project X be accepted? Compute the IRR for project Y. [up to two decimal places] Based on the IRR criterion, should project Y be accepted?
A project has the following cash flows set out below. What is the profitability index of this project if the relevant discount rate is 2 percent? Enter your final answer to two decimal places. Year Cash flow 0 -1,745 1 537 2 2,066 3 3,912
Please answer the following questions using the information below: NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected? Consider the following cash flows: Year 0 1 2 3 4 5 6 Cash Flow -$8,000 $3,000 $3,600 $2,700 $2,500 $2,100 $1,600 Payback. The company requires all projects to payback within 3 years. Calculate the payback period. Should it be accepted or rejected? Discounted Payback. Calculate the discounted payback using a discount rate of 10%. Should it be accepted or rejected? IRR. Calculate the IRR for this project. The company’s required rate of return is 10%. Should it be accepted or rejected? NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?…

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