Use the following table of free cash flows for an investment to answer questions12-15:25,00033,000Free Cash Flow-8,0001,00012. What is the payback period for this project? If the required payback period is 2years, would you invest in this project based on the payback period?13. If the discount rate is 10%, what is the discounted payback period for this project? Ifthe required discounted payback period is 2 years, would you invest in this projectbased on the payback period?14. What is the internal rate of return on this project? If the discount rate (or WACC) is10%, would you invest in this project?15. With a discount rate (or WACC) of 10%, what is the net present value (NPV) of thisproject and would you accept or reject the project?

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Answered: Use the following table of free cash…

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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You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 - $51 - $102 $25 $19 $18 $40 $21 $48 $14 $59 A В a. What are the IRRS of the two projects? b. If your discount rate is 5.3%, what are the NPVS of the two projects? c. Why do IRR and NPV rank the two projects differently? a. What are the IRRS of the two projects? The IRR for project A is %. (Round to one decimal place.) The IRR for project B is %. (Round to one decimal place.) b. If your discount rate is 5.3%, what are the NPVS of the two projects? If your discount rate is 5.3%, the NPV for project A is $ million. (Round to two decimal places.) If your discount rate is 5.3%, the NPV for project B is $ million. (Round to two decimal places.) c. Why do IRR and NPV rank the two projects differently? (Select from the drop-down menus.) NPV and IRR rank the two projects differently because they are measuring different things. is…
What is the NPV of the following project if the discount rate is 11%? Round to the nearest cent.Investment today: $-121,000; Cash flow in year 1: $66,000; Cash flow in year 2: $72,000; Cash flow in year 3: $66,000
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Consider a project with the following cash flows in dollars ($): Year Cash Flow0 -15,0001 50002 50003 50004 5000 Assume the appropriate discount rate for this project is 12%. What is the payback period for this project? (Round your answer to the tenths.)
I need to know the Cash payback period for each project, the Net present value, the annual rate of return for each project and finally I need the projects ranked best to worse (1, 2, 3) on their cashpayback, net present value, and annual return. Finally I need to know which is the best project. Question 1 of 1 > E Pharoah Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $172,000 $182,000 $202,000 Annual net income: Year 1 14,700 18,900 28,350 2 14,700 17,850 24,150 3 14,700 16,800 22,050 4 14,700 12.600 13,650 5 14,700 9,450 12,600 5 14,700 9,450 12,600 Total $73,500 $75,600 $100,800 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.)
If a project requires an initial current investment of £200 and promises to raise £133.1 after three years, what is this project's Net Present Value (NPV) if your discount rate is 10% per year? a) - £66.9 b) - £100 c) Zero d) £66.9
Please solve step by step for clarity, thank you!
0 Question 3 A) A project requires the following cash outlays: $10,000 now and $5,000 a year from now. The project will give a cash return of $5,000 annually for 6 years, the first payment coming in after 3 years. The risk-free rate is 6%. If the proper discount rate is 12%, would you accept this project? B) Evaluate a project with a construction period of 3 years, an operating period of 15 years, and an initial investment of $30,000,000. The project generates annual cash flows of $7,000,000 during the operating phase. Calculate the NPV and IRR for the entire project, including both phases, using a discount rate of 10%. C) Describe the different risk and mitigation techniques that may be used in a power plant project, in controlling (a) engineering risk; (b) completion risk; and (c) market risk. 6:24 PM ✓
A project has the following cash flows: C * 0 = - 100000; C 1 = 50000 C * 2 = 150000 C 3 = 100000 . If the discount rate changes from 12 percent to 15 percent, what is the CHANGE in the NPV of the project ( approximately)? Multiple Choice 12,750 increase 12,750 decrease 14,240 increase 14,240 decrease
What is the payback period on each of the above projects? Given that you wish to use the payback rule with a cutoff period of two years, which projects would you accept? Why? If you use a cutoff period of three years, which projects would you accept? Why? If the opportunity cost of capital is 10%, which projects have positive NPVs? How do you know? “If a firm uses a single cutoff period for all projects, it is likely to accept too many short-lived projects.” Is this statement true or false? How do you know? If the firm uses the discounted-payback rule, will it accept any negative NPV projects? Will it turn down any positive NPV projects? How do you know?
Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%. Time Cash Flow 0 - $53,000 1 $ 21,000 2 $ 21,000 3 $ 21,000 NPV = Payback = Discounted Payback =
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