You have the chance to participate in a project that produces the following cash flows: Co -4,150 Cash Flows ($) G₁ C2₂ 1,350 3,000 a. If the opportunity cost of capital is 10%, what is the NPV of the project? b. What is the IRR of this project? Complete this question by entering your answers in the tabs below. Required A Required B If the opportunity cost of capital is 10%, what is the NPV of the project? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to the nearest whole number. NPV

You have the chance to participate in a project that produces the following cash flows: Co -4,150 Cash Flows ($) G₁ C2₂ 1,350 3,000 a. If the opportunity cost of capital is 10%, what is the NPV of the project? b. What is the IRR of this project? Complete this question by entering your answers in the tabs below. Required A Required B If the opportunity cost of capital is 10%, what is the NPV of the project? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to the nearest whole number. NPV

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section10.6: Profitability Index (pi)

Problem 2ST

See similar textbooks

Similar questions

You have the chance to participate in a project that produces the following cash flows: Co -4,150 Cash Flows ($) G 3,000 C₂ 1,350 a. If the opportunity cost of capital is 10%, what is the NPV of the project? b. What is the IRR of this project? Complete this question by entering your answers in the tabs below. Required A Required B If the opportunity cost of capital is 10%, what is the NPV of the project? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to the nearest whole number. NPV Required A Required B >
Consider an investment project with the cash flows given in the table below. Compute the IRR for this investment. Is the project acceptable at MARR = 10%? The IRR for this project is %. (Round to one decimal place.) n 0 1 2 3 Cash Flow -$35,000 15,000 14,520 13,990
Refer to two projects with the following cash flows: Project A -$100 Year Project B -$100 1 40 50 2 40 50 3 40 50 4 40 If the opportunity cost of capital is 12%, what is the profitability index for each project? (Round your answers to 4 decimal places.) Project A Project B Does the profitability index rank the projects A and B correctly? |(Click to select) v
Refer to two projects with the following cash flows: Project A -$150 65 65 65 65 Year e Project B -$150 75 75 75 If the opportunity cost of capital is 8%, what is the profitability index for each project? (Round your answers to 4 decimal places.) Project A Project B Does the profitability index rank the projects A and B correctly? (Click to select)
The future cash flows of a stand-alone capital project follow: If the cost of capital is 14%, what is the NPV of the project? (your financial calculator with cash flow journal helps here!) year 0 1 2 3 cash flow ($5000) $2500 $2500 $ 2500 $5804 $804 $6217 $1217
MAKE SURE YOU ANSWER THIS IN EXCEL FORMULA, NOT ALGEBRAICALLY!!!!!!!!!
Consider cash flows for the following investment projects (MARR = 15 %). Suppose that projects are mutually exclusive. Which project would you select based on AE criterion? Project A -3000 Project B -3500 ProjectC 4000 1400 1100 1500 2. 1650 1000 1500 3. 1300 1000 1800 1800 4 750 1000
Consider the following projects: Cash Flows ($) Project D E CO00 C101 -11,700 23,400 -21,700 37,975 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 12%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose?
Please answer the following questions using the information below: NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected? Consider the following cash flows: Year 0 1 2 3 4 5 6 Cash Flow -$8,000 $3,000 $3,600 $2,700 $2,500 $2,100 $1,600 Payback. The company requires all projects to payback within 3 years. Calculate the payback period. Should it be accepted or rejected? Discounted Payback. Calculate the discounted payback using a discount rate of 10%. Should it be accepted or rejected? IRR. Calculate the IRR for this project. The company’s required rate of return is 10%. Should it be accepted or rejected? NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?…
You are considering the following two mutually exclusive projects. Using the replacement chain approach and a cost of capital of 10%, calculate the NPV of Project A. (Round to nearest $) Project A Project B Year Cash Flow Cash Flow 0 (20,000) (20,000) 1 15,000 5,000 2 20,000 10,000 3 15,000 4 50,000
Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of return is 16%. Use this information for the next 3 questions. Year Project A Cash Flow Project B Cash Flow ($50,000) ($20,000) 1 15,000 6,000 15,000 6,000 15,000 6,000 4 13,500 5,400 13,500 5,400 6,750 5,400 What is the profitability index of project B? 1.03 1.06 .94 1.01 1.09
You are considering the following two projects and can take only one. Your cost of capital is 10.6%. The cash flows for the two projects a as follows ($ million): a. What is the IRR of each project? b. What is the NPV of each project at your cost of capital? c. At what cost of capital are you indifferent between the two projects? d. What should you do? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Project Year 0 Year 1 Year 2 A - $100 $24 $30 B - $100 $48 $41 Year 3 $41 $30 Year 4 $48 $18 — X