Pearson Etext For Foundations Of Finance -- Combo Access Card (10th Edition)
10th Edition
ISBN: 9780135639344
Author: Arthur J. Keown, John D Martin, J. William Petty
Publisher: PEARSON
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Chapter 10, Problem 4SP
a)
Summary Introduction
To determine: The
b)
Summary Introduction
To determine: The internal
c)
Summary Introduction
To determine: The internal rate of return.
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(IRR
calculation) Determine the IRR on the following projects:
a. An initial outlay of $8,000 resulting in a free cash flow of $1,901 at the end of each year for the next 10 years
b. An initial outlay of $8,000 resulting in a free cash flow of $2,152 at the end of each year for the next 20 years
c. An initial outlay of $8,000 resulting in a free cash flow of $1,045 at the end of each year for the next 12 years
d. An initial outlay of $8,000 resulting in a free cash flow of $2,894 at the end of each year for the next 5 years
a. What is the IRR of a project with an initial outlay of $8,000 resulting in a free cash flow of $1,901 at the end of each
year for the next 10 years?
% (Round to two decimal places.)
(IRR calculation) Determine the IRR on the following projects: a. An initial outlay of $12,000 resulting in a single free cash flow of $17,123 after 8 years b. An initial outlay of $12,000 resulting in a single free cash flow of $50,395 after 14 years c. An initial outlay of $12,000 resulting in a single free cash flow of $107,058 after 23 years d. An initial outlay of $12,000 resulting in a single free cash flow of $13,576 after 5 years Question content area bottom Part 1 a. What is the IRR of a project with an initial outlay of $12,000 resulting in a single free cash flow of $17,123 after 8 years? enter your response here% (Round
(IRR calculation) Determine the IRR on the following projects:
a. An initial outlay of $13,000 resulting in a single free cash flow of $17,207 after 7 years
b. An initial outlay of $13,000 resulting in a single free cash flow of $47,031 after 14 years
c. An initial outlay of $13,000 resulting in a single free cash flow of $110,851 after 23 years
d. An initial outlay of $13,000 resulting in a single free cash flow of $13,624 after 4 years
a. What is the IRR of a project with an initial outlay of $13,000 resulting in a single free cash flow of $17,207 after 7 years?
% (Round to two decimal places.)
Chapter 10 Solutions
Pearson Etext For Foundations Of Finance -- Combo Access Card (10th Edition)
Ch. 10 - Why is capital budgeting such an important...Ch. 10 - What are the disadvantages of using the payback...Ch. 10 - Prob. 4RQCh. 10 - What are mutually exclusive projects? Why might...Ch. 10 - Prob. 6RQCh. 10 - When might two mutually exclusive projects having...Ch. 10 - Prob. 1SPCh. 10 - Prob. 2SPCh. 10 - Prob. 3SPCh. 10 - Prob. 4SP
Ch. 10 - (NPV, PI, and IRR calculations) Fijisawa Inc. is...Ch. 10 - (Payback period, NPV, PI, and IRR calculations)...Ch. 10 - (NPV, PI, and IRR calculations) You are...Ch. 10 - (Payback period calculations) You are considering...Ch. 10 - (NPV with varying required rates of return)...Ch. 10 - Prob. 10SPCh. 10 - (NPV with varying required rates of return) Big...Ch. 10 - (NPV with different required rates of return)...Ch. 10 - (IRR with uneven cash flows) The Tiffin Barker...Ch. 10 - (NPV calculation) Calculate the NPV given the...Ch. 10 - (NPV calculation) Calculate the NPV given the...Ch. 10 - (MIRR calculation) Calculate the MIRR given the...Ch. 10 - (PI calculation) Calculate the PI given the...Ch. 10 - (Discounted payback period) Gios Restaurants is...Ch. 10 - (Discounted payback period) You are considering a...Ch. 10 - (Discounted payback period) Assuming an...Ch. 10 - (IRR) Jella Cosmetics is considering a project...Ch. 10 - (IRR) Your investment advisor has offered you an...Ch. 10 - (IRR, payback, and calculating a missing cash...Ch. 10 - (Discounted payback period) Sheinhardt Wig Company...Ch. 10 - (IRR of uneven cash-flow stream) Microwave Oven...Ch. 10 - (MIRR) Dunder Mifflin Paper Company is considering...Ch. 10 - (MIRR calculation) Arties Wrestling Stuff is...Ch. 10 - (Capital rationing) The Cowboy Hat Company of...Ch. 10 - Prob. 29SPCh. 10 - (Size-disparity problem) The D. Dorner Farms...Ch. 10 - (Replacement chains) Destination Hotels currently...Ch. 10 - Prob. 32SPCh. 10 - Prob. 33SPCh. 10 - Why is the capital-budgeting process so important?Ch. 10 - Prob. 2MCCh. 10 - What is the payback period on each project? If...Ch. 10 - What are the criticisms of the payback period?Ch. 10 - Prob. 5MCCh. 10 - Prob. 6MCCh. 10 - Prob. 7MCCh. 10 - Prob. 8MCCh. 10 - Prob. 9MCCh. 10 - Determine the IRR for each project. Should either...Ch. 10 - How does a change in the required rate of return...Ch. 10 - Caledonia is considering two investments with...
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- Internal rate of return A project is estimated to cost 463,565 and provide annual net cash flows of 115,000 for nine years. Determine the internal rate of return for this project, using the present value of an annuity table appearing in Exhibit 5 of this chapter.arrow_forwardAverage rate of return Determine the average rate of return for a project that is estimated to yield total income of 936,000 over eight years, has a cost of 1,200,000, and has a 100,000 residual value.arrow_forwardFoster Manufacturing is analyzing a capital investment project that is forecast to produce the following cash flows and net income: The payback period of this project will be: a. 2.5 years. b. 2.6 years. c. 3.0 years. d. 3.3 years.arrow_forward
- Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two, $2,500 in year three, $3,000 in year four and $2,000 in year five. What is the NPV using 8% as the discount rate?arrow_forwardThere are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: Use the information from the previous exercise to calculate the internal rate of return on both projects and make a recommendation on which one to accept. For further instructions on internal rate of return in Excel, see Appendix C.arrow_forwardProject A has a required return of 9.2 percent and cash flows of -$87,000, $32,600, $35,900, and $43,400 for Years 0 to 3, respectively. Project B has a required return of 12.7 percent and cash flows of -$85,000, $14,700, $21,200, and $89,800 for Years 0 to 3, respectively. Which project(s) should you accept based on net present value if the projects are mutually exclusive? Select one: A. Accept either one, but not both B. Accept both projects C. Accept Project A and reject Project B D. Reject Project A and accept Project B E. Reject both projectsarrow_forward
- Consider the cash flows for the following investment projects: (a) For Project A. find the value of X that makes the equivalent annual receiptsequal the equivalent annual disbursement at i = 13%.(b) Would you accept Project Bat i = 15% based on the AE criterion?arrow_forwardConsider the cash flows for the following investment projects: (a) For Project A. find the value of X that makes the equivalent annual receiptsequal the equivalent annual disbursement at i = 13%.(b) Would you accept Project Bat i = 15% based on the AE criterion?arrow_forwardConsider the following sets of investment projects: Compute the equivalent annual worth of each project at i = 13%, and determine the acceptability of each project.arrow_forward
- Consider the following project balances for a typical investment project with aservice life of four years: (a) Construct the original cash flows of the project.(b) Determine the interest rate used in computing the project balance.(c) Would this project be acceptable at a MARR of 12%?arrow_forwardAssume that Project A has the cash flows listed below and a relevant cost of capital of 13 percent. Based on this data, determine the net present value (NPV) of this project using the equivalent annual annuity (EAA) approach and assuming infinite replication. Year 0 1 2 3 4 5 $2.905.70 O $4.967.16 $2.063.33 $3.865.27 $6,244.42 Project A Cash Flow - $8.000.00 $ $ $ 0.00 0.00 0.00 0.00 $20,000.00arrow_forwardConsider the following project-balance profiles for proposed investment projects, where the project-balance figures are rounded to the nearest dollar: (a) Compute the net present worth of each investment.(b) Determine the project balance at the end of period 2 for Project C ifA2 = $500.(c) Determine the cash flows for each project.(d) Identify the net future worth of each project.arrow_forward
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