You have the chance to participate in a project that produces the following cash flows:Co-4,150Cash Flows ($)G3,000C₂1,350a. 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 ARequired BIf 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 finalanswer to the nearest whole number.NPVRequired ARequired B >

Understanding Part A: NPV CalculationThe NPV measures the present value of a series of future cash…

Answered: You have the chance to participate in a…

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

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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
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 -$35,000 15,000 14,520 13,990
MAKE SURE YOU ANSWER THIS IN EXCEL FORMULA, NOT ALGEBRAICALLY!!!!!!!!!
Owe
Consider the following projects: Cash Flows ($) 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?
Refer to two projects with the following cash flows: Project A -$150 65 65 65 65 Year e Project B -$150 75 75 75 If the opportunity cost of capital is 8%, what is the profitability index for each project? (Round your answers to 4 decimal places.) Project A Project B Does the profitability index rank the projects A and B correctly? (Click to select)
You have the chance to participate in a project that produces the following cash flows: Cash Flows ($) C0 C1 C2 −3,600 5,400 −10,800 If the opportunity cost of capital is 10%, what is the NPV of the project? Would you accept the offer?
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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 $1217
You are considering the following two projects and can take only one. Your cost of capital is 10.6%. The cash flows for the two projects a as follows ($ 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
Consider the following two mutually exclusive investment projects:Project Cash Flowsn A B 0 -$4,000 -$8,5001 $400 $11,5002 $7,000 $400Assume that the MARR = 15%.(a) Using the NPW criterion, which project would you select?(b) On the same chart, sketch the PW(i) function for each alternative fori = 0% and 50%. For what range of i would you prefer Project B?

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