5th Edition

ISBN: 9781305250901

Author: Wayne L. Winston, S. Christian Albright

Publisher: Cengage Learning

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Forecasting is the process of predicting the future based on the past and the present data and circumstances. In other words, forecasting is the act of making a detailed analysis of future events based on the decisions made in the past as well as the pre…

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Chapter 2, Problem 44P

The IRR is the discount rate r that makes a project have an NPV of $0. You can find IRR in Excel with the built-in IRR function, using the syntax =IRR(range of cash flows). However, it can be tricky. In fact, if the IRR is not near 10%, this function might not find an answer, and you would get an error message. Then you must try the syntax =IRR(range of cash flows, guess), where “guess" is your best guess for the IRR. It is best to try a range of guesses (say, −90% to 100%). Find the IRR of the project described in Problem 34.

34. Consider a project with the following cash flows: year 1, −$400; year 2, $200; year 3, $600; year 4, −$900; year 5, $1000; year 6, $250; year 7, $230. Assume a discount rate of 15% per year.

a. Find the project’s NPV if cash flows occur at the ends of the respective years.
b. Find the project’s NPV if cash flows occur at the beginnings of the respective years.
c. Find the project’s NPV if cash flows occur at the middles of the respective years.

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Chapter 2, Problem 43P

Chapter 2, Problem 45P

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Chapter 2 Solutions

Practical Management Science

Ch. 2.4 - Prob. 1P Ch. 2.4 - Prob. 2P Ch. 2.4 - Prob. 3P Ch. 2.4 - Prob. 4P Ch. 2.5 - Prob. 5P Ch. 2.5 - Prob. 6P Ch. 2.5 - Prob. 7P Ch. 2.5 - Prob. 8P Ch. 2.5 - Prob. 9P Ch. 2.6 - Prob. 10P

Ch. 2.6 - Prob. 11P Ch. 2.6 - Prob. 12P Ch. 2.6 - Prob. 13P Ch. 2.7 - Prob. 14P Ch. 2.7 - Prob. 15P Ch. 2.7 - Prob. 16P Ch. 2.7 - Prob. 17P Ch. 2.7 - Prob. 18P Ch. 2.7 - Prob. 19P Ch. 2 - Julie James is opening a lemonade stand. She...Ch. 2 - Prob. 21P Ch. 2 - Prob. 22P Ch. 2 - Prob. 23P Ch. 2 - Prob. 24P Ch. 2 - Prob. 25P Ch. 2 - The file P02_26.xlsx lists sales (in millions of...Ch. 2 - Prob. 27P Ch. 2 - The file P02_28.xlsx gives the annual sales for...Ch. 2 - Prob. 29P Ch. 2 - Prob. 30P Ch. 2 - Prob. 31P Ch. 2 - Prob. 32P Ch. 2 - Assume the demand for a companys drug Wozac during...Ch. 2 - Prob. 34P Ch. 2 - Prob. 35P Ch. 2 - Prob. 36P Ch. 2 - Prob. 37P Ch. 2 - Suppose you are borrowing 25,000 and making...Ch. 2 - You are thinking of starting Peaco, which will...Ch. 2 - Prob. 40P Ch. 2 - The file P02_41.xlsx contains the cumulative...Ch. 2 - Prob. 42P Ch. 2 - Prob. 43P Ch. 2 - The IRR is the discount rate r that makes a...Ch. 2 - A project does not necessarily have a unique IRR....Ch. 2 - Prob. 46P Ch. 2 - Prob. 1C Ch. 2 - The eTech Company is a fairly recent entry in the...

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Solution Summary: The author explains that the Internal Rate of Return (IRR) is a metric used in the capital budgeting process to estimate the profitability of potential investments made by an organization.

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