Adequate information: Year Cash Flows 0 -$65,000,000 1 $92,000,000 2 -$11,000,000 Required return on investment = 10% To explain: Whether the company accepts or rejects the project. Introduction: NPV is defined as the net of the aggregate present value of cash inflows and the cash outflows associated with a project.

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Answer 1

Question

Chapter 5, Problem 13QAP

a.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To explain: Whether the company accepts or rejects the project.

Introduction: NPV is defined as the net of the aggregate present value of cash inflows and the cash outflows associated with a project.

b.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To compute: The IRR of the project and the number of IRR. Also, whether the company accepts or rejects the project if the decision rule of the IRR is applicable, and what is going on here.

Introduction: IRR is defined as the rate at which the aggregate present value of net cash inflows is the same as the aggregate present value of net cash outflows of the project.

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Answer 2

Question

Chapter 5, Problem 13QAP

a.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To explain: Whether the company accepts or rejects the project.

Introduction: NPV is defined as the net of the aggregate present value of cash inflows and the cash outflows associated with a project.

b.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To compute: The IRR of the project and the number of IRR. Also, whether the company accepts or rejects the project if the decision rule of the IRR is applicable, and what is going on here.

Introduction: IRR is defined as the rate at which the aggregate present value of net cash inflows is the same as the aggregate present value of net cash outflows of the project.

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Answer 3

Question

Chapter 5, Problem 13QAP

a.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To explain: Whether the company accepts or rejects the project.

Introduction: NPV is defined as the net of the aggregate present value of cash inflows and the cash outflows associated with a project.

b.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To compute: The IRR of the project and the number of IRR. Also, whether the company accepts or rejects the project if the decision rule of the IRR is applicable, and what is going on here.

Introduction: IRR is defined as the rate at which the aggregate present value of net cash inflows is the same as the aggregate present value of net cash outflows of the project.

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Answer 4

Question

Chapter 5, Problem 13QAP

a.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To explain: Whether the company accepts or rejects the project.

Introduction: NPV is defined as the net of the aggregate present value of cash inflows and the cash outflows associated with a project.

b.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To compute: The IRR of the project and the number of IRR. Also, whether the company accepts or rejects the project if the decision rule of the IRR is applicable, and what is going on here.

Introduction: IRR is defined as the rate at which the aggregate present value of net cash inflows is the same as the aggregate present value of net cash outflows of the project.

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Answer 5

Chapter 5, Problem 13QAP

a.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To explain: Whether the company accepts or rejects the project.

Introduction: NPV is defined as the net of the aggregate present value of cash inflows and the cash outflows associated with a project.

b.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To compute: The IRR of the project and the number of IRR. Also, whether the company accepts or rejects the project if the decision rule of the IRR is applicable, and what is going on here.

Introduction: IRR is defined as the rate at which the aggregate present value of net cash inflows is the same as the aggregate present value of net cash outflows of the project.

Answer 6

Chapter 5, Problem 13QAP

a.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To explain: Whether the company accepts or rejects the project.

Introduction: NPV is defined as the net of the aggregate present value of cash inflows and the cash outflows associated with a project.

Answer 7

Chapter 5, Problem 13QAP

a.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To explain: Whether the company accepts or rejects the project.

Introduction: NPV is defined as the net of the aggregate present value of cash inflows and the cash outflows associated with a project.

Answer 8

b.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To compute: The IRR of the project and the number of IRR. Also, whether the company accepts or rejects the project if the decision rule of the IRR is applicable, and what is going on here.

Introduction: IRR is defined as the rate at which the aggregate present value of net cash inflows is the same as the aggregate present value of net cash outflows of the project.

Answer 9

b.

Summary Introduction

Adequate information:

Year Cash Flows
0 -$65,000,000
1 $92,000,000
2 -$11,000,000

Required return on investment = 10%

To compute: The IRR of the project and the number of IRR. Also, whether the company accepts or rejects the project if the decision rule of the IRR is applicable, and what is going on here.

Introduction: IRR is defined as the rate at which the aggregate present value of net cash inflows is the same as the aggregate present value of net cash outflows of the project.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 5 - Payback Period and Net Present Value If a project...Ch. 5 - Net Present Value Suppose a project has...Ch. 5 - Comparing Investment Criteria Define each of the...Ch. 5 - Payback and Internal Rate of Return A project has...Ch. 5 - Prob. 5CQ Ch. 5 - Capital Budgeting Problems What are some of the...Ch. 5 - Prob. 7CQ Ch. 5 - Prob. 8CQ Ch. 5 - Net Present Value versus Profitability Index...Ch. 5 - Internal Rate of Return Projects A and B have the...

Solution Summary: The author defines the net present value (NPV) of a project and determines whether to accept or reject it.

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Chapter 5 Solutions

Year	Cash Flows
0	-$65,000,000
1	$92,000,000
2	-$11,000,000