Use the information provided below to answer questions 23 to 25.The projected annual net cash flows associated with an investment opportunity are shown below in Table 5. The expectedrate of return on the investment is 12%.Year1220 000250 000300 000200 0005180 000Table 5: Annual net cash flows of the investment opportunity.234Question 23Question 24Future Cash flowsA R859 028B R902 575C R838 510DR866 704Discount factorQuestion 25KDetermine the missing values represented by K, L, M, and N in Table 5.A K = 0.8929; L = R196 438; M = 0.7118 and N = R213 540BK = 0.9009; L = R198 198; M = 0.7312 and N = R219 360C K=0.9174; L = R201 828; M = 0.7722 and N = R231 660D K = 0.8929; L = R196 438; M = 0.7722 and N = R231 540A R811 490B R850 000C R848 510D R860 0000.7972MCalculate the total present value of the net cash flows from the investment opportunity.0.63550.5674Present ValuesL199 300N127 100102 132If the Net Present Value of the investment opportunity is an unfavourable R11 490, what is the initial outlay?

The projected annual net cash flows associated with an investment opportunity are shown below in Table 5. The expected rate of return on the investment is 12%. Future Cash flows Year 1 220 000 250 000 300 000 200 000 5 180 000 Table 5: Annual net cash flows of the investment opportunity. ان این 2 3 Discount factor 4 K 0.7972 M 0.6355 0.5674 Present Values L 199 300 N 127 100 102 132

The projected annual net cash flows associated with an investment opportunity are shown below in Table 5. The expected rate of return on the investment is 12%. Future Cash flows Year 1 220 000 250 000 300 000 200 000 5 180 000 Table 5: Annual net cash flows of the investment opportunity. ان این 2 3 Discount factor 4 K 0.7972 M 0.6355 0.5674 Present Values L 199 300 N 127 100 102 132

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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Assuming a 1-year, money market account investment at 2.122.12 percent (APY), a 0.810.81 percent inflation rate, a 3333 percent marginal tax bracket, and a constant $60 comma 00060,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions? Question content area bottom Part 1 Assuming a 1-year, money market account investment at 2.122.12% (APY), a 3333% marginal tax bracket, and a constant $ 60 comma 000$60,000 balance, the after-tax rate of return is enter your response here%. (Round to two decimal places.) Part 2 Assuming a 1-year, money market account investment at 2.122.12% (APY), a 3333% marginal tax bracket, and a constant $ 60 comma 000$60,000 balance, the after-tax monetary return is $enter your response here. (Round to the nearest dollar.) Part 3 Given an after-tax return of 1.421.42% and an inflation rate of…
Annual cash inflows from two competing investment opportunities aregiven. Each investment opportunity will require the same initial investment.Year AInvestmentB123$10,00013,000$39,00016,000$13,000$13,00013,000$39,000Requirement1. Assuming a 12% interest rate, which investment opportunity would you choose?
For the cash flow shown below. Find the external rate of return (EROR) using the modified rate of return approach (MIRR), an investment rate of 15% per year, and a borrowing rate of 8% per year. Year 3 4 NCF,$ -9000 +4100 -2000 -7000 +12000 +700 +800 Select one: O a. 7.9% Ob.9.9% O c. 5.9% O d. 11.9%
Present worth of several incremental cash flows are shown in the graph for various interest rate values. Among project A, B, and C, with initial investments A < B < C, which one should be selected in the following cases? (1) When MARR = 4% (2) When MARR = 8%
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An investment costs $4,000 today. This investment is expected to produce annual cash flows of $1,200, $1,400, $ 1,300 and $1,100, respectively, over the next four years. What is the internal rate of return (IRR) ( or geometric average) on this investment? Question 23 options: 2.43 % 6.25 % 9.72% 31.25%
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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: 1 2 3 4 Cash flow: -$5,000 $1,270 $2,470 $1,670 $1,670 5 6 $1,470 $1,270 Use the Pl decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) PI Should it be accepted or rejected? O rejected O accepted
An investment, which is worth $57,023.00 and has an expected return of 17.00 percent, is expected to pay fixed annual cash flows forever with the next annual cash flow expected in 1 year. What is the present value of the annual cash flow that is expected in 3 years from today? O $9,693.91 (plus or minus 3 dollars) O $35,603.48 (plus or minus 3 dollars) O $6,052.59 (plus or minus 3 dollars) O $8,285.39 (plus or minus 3 dollars) O none of the answers are within 3 dollars of the correct answer
For the net cash flow series, find the external rate of return (EROR) using the MIRR method with an investment rate of 25% per year and a borrowing rate of 11% per year. What is the external rate of return?
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 8 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: −$5,000 $1,230 $2,430 $1,630 $1,550 $1,430 $1,230 Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.) Payback: ? Years

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