You are given the following information about the cash flows for Projects A and B: Project B -$12.643.00 $6,264.00 $5,119.00 $4,284.00 $3,265.00 $2,884.00 Year 0 1 2 3 4 5 26.0818% Given this information, and assuming a risk-adjusted discount rate of 14.0 percent for both projects. determine the internal rate of return (IRR) for the project with the highest net present value (NPV). Ⓒ25.6301% 25.1784% O24.2750% Project A -$10,356.00 O24.7267% $2,185.00 $4,294.00 $4,642.00 $6,368.00 $3,125.00

You are given the following information about the cash flows for Projects A and B: Project B -$12.643.00 $6,264.00 $5,119.00 $4,284.00 $3,265.00 $2,884.00 Year 0 1 2 3 4 5 26.0818% Given this information, and assuming a risk-adjusted discount rate of 14.0 percent for both projects. determine the internal rate of return (IRR) for the project with the highest net present value (NPV). Ⓒ25.6301% 25.1784% O24.2750% Project A -$10,356.00 O24.7267% $2,185.00 $4,294.00 $4,642.00 $6,368.00 $3,125.00

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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Find the profitability index of a project with the following cash flows using a discount rate of 4%: Period 0: -1000 Period 1: 793 Period 2: 391 Period 3: 204 Round your answer to the nearest one-hundredth.
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
Annual cash inflows that will arise from two competing investment projects are given below: Year Investment A Investment B 1 $ 4,000 $ 1,000 2,000 2 3,000 3 3,000 2,000 4 4,000 1,000 $ 10,000 $10,000 The discount rate is 9%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: Compute the present value of the cash inflows for each investment. Each investment opportunity will require the same initial investment. Present Value of Cash Flows Year Investment A Investment B 1 2 P 3 4
There is a project with the following cash flows : Year Cash Flow 0 −$ 23,350 1 6,300 2 7,400 3 8,450 4 7,350 5 5,900 What is the payback period?
Mendez Company has identified an investment project with the following cash flows. Year 1. Cash Flow $ 470 610 735 920 a. If the discount rate is 10 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 18 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 24 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.., 32.16.) a. Present value at 10 percent b. Present value at 18 percent c. Present value at 24 percent 234
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$ 15,456 5,225 8,223 13,013 8,705 0 1 234 -$ 276,363 26,400 51,000 57,000 402,000 Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A? Payback period b. What is the payback period for Project B? Payback period c. What is the discounted payback period for Project A? Discounted payback period
A company is considering three alternative investment projects with different net cash flows. The present value of net cash flows is calculated using Excel and the results follow. Potential Projects Present value of net cash flows (excluding initial investment) Initial investment Project A $ 11,226 (10,000) Project B $ 10,568 (10,000) a. Compute the net present value of each project. b. If the company accepts all positive net present value projects, which of these will it accept? c. If the company can choose only one project, which will it choose on the basis of net present value? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the net present value of each project. Potential Projects Project A Project B Project C Present value of net cash flows Initial investment Net present value $ $ $
I need full details solution with explination.
An investment will provide the following future cash flows. Year 1 = 5,919 Year 2 = 8,327 Year 3 and 4 = 4,718 Year 5 = 3,048 Using a 9.01% discount rate, what is the present value of this investment?
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$29,000 −$29000 1 14,400 4,300 2 12,300 9,800 3 9,200 15,200 4 5,100 16,800 a) What is the Internal Rate of Return (IRR) for each of these projects? b) Using the IRR decision rule, which project should the company accept? c) If the required return is 11 percent, what is the Net Present Value (NV) for each of these projects? d) Using the NPV decision rule, which project should the company accept? e) Why do you think the NPV and IRR rules do not agree on same project approval/rejection direction?
Determine the risk adjusted Net Present Value of the following Projects: - Particulars Project A Project B Project C Net Cash Outlays (Rs) 100,000.00 120,000.00 210,000.00 Project Life 5 Years 5 Years 5 Years Annual Cash Inflow (Rs) 30,000.00 42,000.00 70,000.00 Coefficient of Variation 0.40 0.80 1.2 The company selects the risk-adjusted rate of discount on the basis of the coefficient of variation. Coefficient of Variation Risk Adjusted Rate of Discount Present Value factor 1 to 5 years at risk adjusted rate of discount 0.0 10 % 3.791 0.4 12 % 3.605 0.8 14 % 3.433 1.2 16 % 3.274 1.6 18 % 3.127 2.0 22 % 2.864 More than 2.0 25 % 2.689
Calculate the NPVs of both Project X and Project Y. Show the NPVs for each project. If the Projects are Independent which would you approve? If the Projects are Mutually Exclusive which would you approve?

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