You are analyzing a proposed project and have compiled the following information: WACC (Required Return): 8.00% Year -$200,000 $70,000 $80,000 $90,000 Cash flows Required payback period: 2 years Required discounted payback period: 2.5 years What is the project's IRR? Would the company accept or reject the project based on the IRR criterion? O8.00%; reject 8.00%; accept 9.28%; reject O 9.28%; accept

You are analyzing a proposed project and have compiled the following information: WACC (Required Return): 8.00% Year -$200,000 $70,000 $80,000 $90,000 Cash flows Required payback period: 2 years Required discounted payback period: 2.5 years What is the project's IRR? Would the company accept or reject the project based on the IRR criterion? O8.00%; reject 8.00%; accept 9.28%; reject O 9.28%; accept

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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If the cash flows for project A are C0 = −1,000; C1 = +600; C2 = +400; and C3 = +1,500, calculate the payback period. Group of answer choices 1 year Cannot be determined 3 Years 2 years
please ASAP, direct thumps up :)
A firm evaluates all of its projects by applying the IRR rule. If the required return is 18 percent, will the firm accept the following project?CF0 = -$30,000CO1 = $20,000C02 = $14,000C03 = $11,000 yes or no
4.43 (b) Consider a 2-year project requiring a cash injection of $200 immediately and $230 after 1 year for an income of $500 at the end of year 2. (b) Will you be interested in this project based on the NPV rule at 8%? Will the IRR rule work in this problem?
Project S requires an initial outlay at t = 0 of $16,000, and its expected cash flows would be $5,000 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $30,500, and its expected cash flows would be $9,450 per year for 5 years. If both projects have a WACC of 16%, which project would you recommend? Select the correct answer. O a. Project S, because the NPVS > NPVL. O b. Both Projects S and L, because both projects have NPV's > 0. c. Both Projects S and L, because both projects have IRR's > 0. O d. Project L, because the NPVL > NPVS. O e. Neither Project S nor L, because each project's NPV < 0.
Which of the following describes the NPV decision rule? Accept if the cost of the project is recouped within 3 years. Accept if the PV of the cash inflows of the project divided by the absolute value of the cost of the project is greater than one. Accept if the PV of the cash inflows from the project minus the cost of the project is greater than zero Accept if the average net income from the project divided by the average book value is greater than the target required Accept if the rate of return earned on the project is greater than the required return for the project.
Project Q requires an initial outlay at t = 0 of $20,000, and its expected cash flows would be $5,000 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $26,000, and its expected cash flows would be $13,600 per year for 5 years. If both projects have a WACC of 16%, which project would you recommend? Select the correct answer. a. Neither Project S nor L, since each project's NPV < 0. b. Project S, since the NPVS > NPVL. c. Project L, since the NPVL > NPVS. d. Both Projects S and L, since both projects have IRR's > 0. e. Both Projects S and L, since both projects have NPV's > 0.
Please answer entire question! (mc options 19%, 20%, 21%, 22%, 23%)
Compute the discounted payback statistic for Project C if the appropriate cost of capital is 7 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project C Time: 0 1 2 3 4 5 Cash flow: −$2,500 $1,080 $930 $970 $600 $400 Should the project be accepted or rejected?multiple choice accepted rejected
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
Target Corporation (TGT) is considering a new delivery system that costs $194,875. Assume a required rate of return of 4.26% and the following cash flow schedule: Year 1: $46,608 .Year 2: $70,559 Year 3: $95,705 Year 4: $11,450 The project's discounted payback period (DPP) is closest to O A. 2.08 years. OB. 2.19 years. OC. 2.31 years. COD. 2.44 years.
The following two alternatives are given. Data A B. First Cost $8,200 $5,600 Annual Cost $1,000 $800 Annual Benefit $2,700 $2,100 Life, Years 7. Salvage Value $2,800 $1,000 Assume that MARR is 15%. Use the incremental rate of return analysis to determine which alternative (A or B) one should choose. Find the AIRR, or a range of AIRR. O 10% O 10-12% O 12-15% O > 15%

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