6th Edition

ISBN: 9781337671989

Author: WINSTON

Publisher: Cengage

Concept explainers

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…

Videos

Textbook Question

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 2, Problem 43P

Chapter 2, Problem 45P

Students have asked these similar questions

Sales of tablet computers at Marika Gonzalez's electronics store in Washington, D.C., over the past 10 weeks are shown in the table below: Week 1 2 3 4 5 6 7 8 9 10 Demand 21 21 27 38 25 30 35 24 25 30 a) The forecast for weeks 2 through 10 using exponential smoothing with a = 0.50 and a week 1 initial forecast of 21.0 are (round your responses to two decimal places): Week 1 2 3 4 5 6 7 8 9 10 Demand 21 21 27 38 25 30 35 24 25 30 Forecast 21.0 21 21 24 31 28 29 32 28 26.50 b) For the forecast developed using exponential smoothing (a = 0.50 and initial forecast 21.0), the MAD = |||||sales (round your response to two decimal places).

Sales of tablet computers at Marika Gonzalez's electronics store in Washington, D.C., over the past 10 weeks are shown in the table below: Week Demand 1 2 3 4 5 6 7 8 9 10 21 21 27 38 25 30 35 24 25 30 a) The forecast for weeks 2 through 10 using exponential smoothing with a = 0.50 and a week 1 initial forecast of 21.0 are (round your responses to two decimal places): Week 1 2 3 4 5 Demand 21 21 27 38 Forecast 21.0 ☐ G ☐ ☐ 6 7 25 30 35 ∞ ☐ 8 9 10 24 25 30

Each machine costs $3 Million. Building the room with all its attendant safety protection and other ancillary costs increases the spending by an additional $2.0 million dollars per MRI suite. Each machine can perform 2000 scans per year. Each reading of an MRI scan by a radiologist, along with other per-scan-related costs, is $500 per scan. The machine will last five years. Don’t worry about discount rates for this problem Graph the total costs over 5 years as a function of sales for 0-3000 patients annually. Hint: you may need to add a second MRI at some point. Suppose that you want to make a profit of $500 per scan at a target volume of 1000 patients per year, and you purchase only one machine. Superimpose the total revenue curve on top of the total cost curve in (1).

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 - A company manufacturers a product in the United...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...

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.

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.

Concept explainers

Videos

Want to see the full answer?

Chapter 2 Solutions