Using discount rate 20% the project should be rejected or accepted inInitial cost: $467,000Cash flow year one: $134,000Cash flow year two: $230,000Cash flow year three: $187,000Cash flow year four: $134,000PrintDone12f10f11Af8fg144

Although a project can be valued on different basis like IRR or payback period etc. The core measure…

Answered: Using discount rate 20% the project…

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Using discount rate 20% the project should be rejected or accepted

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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Question

Using discount rate 20% the project should be rejected or accepted

in
Initial cost: $467,000
Cash flow year one: $134,000
Cash flow year two: $230,000
Cash flow year three: $187,000
Cash flow year four: $134,000
Print
Done
12
f10
f11
A
f8
fg
144

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calculate the Net present value for all three projects, the WACC (discount factor) is 4.25% pick which project is the best one, please show all your working out if possible thankyou and have a nice day :)
Consider the following two projects: Cash flows Project A Project B C0�0 −$ 240 −$ 240 C1�1 100 123 C2�2 100 123 C3�3 100 123 C4�4 100 a. If the opportunity cost of capital is 8%, which of these two projects would you accept (A, B, or both)? b. Suppose that you can choose only one of these two projects. Which would you choose? The discount rate is still 8%. c. Which one would you choose if the cost of capital is 16%? d. What is the payback period of each project? e. Is the project with the shortest payback period also the one with the highest NPV? f. What are the internal rates of return on the two projects? g. Does the IRR rule in this case give the same answer as NPV? h. If the opportunity cost of capital is 8%, what is the profitability index for each project? i. Is the project with the highest profitability index also the one with the highest NPV? j. Which measure should you use to choose between the projects?
The NPV of a project when discounted using a discount rate of 6% is positive $ 40,000. When the same project is discounted using a discount rate of 16% the NPV is negative $ 80,000. What is the IRR using linear interpolation A.5.33% B.11.00% C.9.33% D.0%
A firm requires a payback period of 2 years or less. According to the payback period rule, which of the following projects is acceptable to this firm? Year Project A Project B Project C 0 -$86 -$128 -$77 1 30 40 100 2 40 20 -50 3 50 10 4 60 130 a. If you use payback period as a decision rule, you would choose (No answer given) Project A Project B Project C
Please do not give solution in image format thanku
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Answer this question as it is pertaining to two MUTUALLY EXCLUSIVE projects on the following figure. At what discount rate will you be indifferent to these two projects under the NPV rule? Group of answer choices 0% 8% 11% 14%
Wilson is concerned that this project has multiple its year 1, 2 flows -50 100 0 -50 how many discount rates produce a zero NPV for the project? a. two, discount rates of 0% and 62% b.one, discount rate of 0 percent c. two, discount rates of 0% and 32%
28) ABC Corporation is concerned that the following project has some problem with IRR. Year 0 1 2 4 5 -150-120 CF_Project 700 -100-90 How many discount rates produce a zero NPV for this project? A) One, a discount rate of 0% B) One, a discount rate of 36% C) One, a discount rate of 69% D) Two, discount rates of 0% and 36% E) Two, discount rates of 0% and 69% F) Two, discount rates of 36% and 69% G) None H) None of the above 29) ABC Corporation is considering an investment of $400 million with expected after-tax cash inflows of $102 million per year for seven years. The required rate of return is 10%. However, there is a possibility that the project will not get the required level of investments and ABC Corporation will have no other choice but to proceed with available funding (90% of the required investments). In this case, the after-tax cash inflows of $91,8 million per year are expected for seven years. As a result, on the NPV profile of a project: A) the vertical intercept shifts…
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#3 HE Year Project A Project B 0 -$20,000 -$23,000 1 2 3 15,200 5,900 2,100 14,300 8.100 7,100 Suppose the company uses the NPV rule to rank these two projects. Which project should be chosen if the appropriate discount rate is 15 percent?

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