CORPORATE FINANCE- ACCESS >C<
CORPORATE FINANCE- ACCESS >C<
12th Edition
ISBN: 9781307447248
Author: Ross
Publisher: MCG/CREATE
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Chapter 5, Problem 16QAP

Comparing Investment Criteria Consider the following cash flows of two mutually exclusive projects for AZ-Motorcars. Assume the discount rate for both projects is 10 percent.

Chapter 5, Problem 16QAP, Comparing Investment Criteria Consider the following cash flows of two mutually exclusive projects

a. Based on the payback period, which project should be accepted?

b. Based on the NPV, which project should be accepted?

c. Based on the IRR, which project should be accepted?

d. Based on this analysis, is incremental IRR analysis necessary? If yes, please conduct the analysis.

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: A project costs $100,000 and is expected to generate cash flows of $30,000 annually for 5 years. If the discount rate is 8%, should the project be accepted based on Net Present Value (NPV)?
You are considering a project in Poland, which has an initial cost of 250,000PLN. The project is expected to return a one-time payment of 400,000PLN 5 years from now. The risk-free rate of return is 3% in Canada and 4% in Poland. The inflation rate is 2% in Canada and 5% in Poland. Currently, you can buy 375PLN for $100. How much will the payment 5 years from now be worth in dollars?   Question 6 options:   $1,576,515   $1,489,025   $101,490   $1,462,350   $142,060
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CORPORATE FINANCE- ACCESS >C<

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