EBK CORPORATE FINANCE
4th Edition
ISBN: 8220103145947
Author: DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 19, Problem 5P
Under the assumptions that Ideko’s market share will increase by 0.5% per year (implying that the investment, financing , and
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Consider an investment project, which behaves according to the cash flow (in local currency) below, as well as the respective inflations for the period.
In view of the above and knowing that the capital cost of the project is 15% per year, it is requested:
a) The values of NPV and IRR
b) A graphical sketch of NPVs versus interest rates
c) Decision on the feasibility of the project regarding the IRR and NPV indicators
Anos = years
Fluxo de caixa = cash flow
Taxa de inflação do período = period inflation rate
Find the modified internal rate of return (MIRR) for a proposed project costing $12,513. Assume
that the appropriate cost of capital for projects of this risk level, at this company is 10.96%, and
the estimated cash flows for the life of the project are found in the table below. (If you calculate
an MIRR of 20.22% , please enter 20.22- do not include the % symbol, and use at least two decimal
places).
Year 1
$7,261
Year 2
$4,832
Year 3
$9,441.2
Year 4
$13,000
Year 5
$12,638
Compute for the following:
1. Accounting rate or return based on the average investment
2. Net Present Value
3. Traditional Payback Period
Chapter 19 Solutions
EBK CORPORATE FINANCE
Ch. 19.1 - Prob. 1CCCh. 19.1 - Prob. 2CCCh. 19.2 - Prob. 1CCCh. 19.2 - Prob. 2CCCh. 19.3 - What is a pro forma income statement?Ch. 19.3 - Prob. 2CCCh. 19.4 - Prob. 1CCCh. 19.4 - Prob. 2CCCh. 19.5 - Prob. 1CCCh. 19.5 - Prob. 2CC
Ch. 19.6 - Prob. 1CCCh. 19.6 - Prob. 2CCCh. 19 - Prob. 1PCh. 19 - Prob. 2PCh. 19 - Prob. 3PCh. 19 - Prob. 4PCh. 19 - Under the assumptions that Idekos market share...Ch. 19 - Prob. 6PCh. 19 - Prob. 7PCh. 19 - Prob. 8PCh. 19 - Prob. 11PCh. 19 - Calculate Idekos unlevered cost of capital when...Ch. 19 - Using the information produced in the income...Ch. 19 - How does the assumption on future improvements in...Ch. 19 - Approximately what expected future long-run growth...Ch. 19 - Prob. 16P
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