Homework Answers
8.D.Projects are mutually exclusive.
Ranking conflicts can arise if one relies on IRR instead of NPV in case the projects are mutually exclusive.
9.d.opportunity costs.
the cash flows that come at the expense of existing projects are opportunity costs.
10.D. sunk costs.
sunk costs are not relevant cash flows, they are already incurred and are not relevant now.
11.D. a cost that has already been incurred and cannot be recouped.
a sunk cost is one which is already incurred and cannot be recouped.
12.C.9.6%.
required return = dividend just paid *(1+ growth rate) / price + growth rate
=>1.75*(1.05) / 40 + 0.05
=>0.0459375+0.05
=>0.0959375
=>9.6%...(rounded off).
Add Answer to:
B) Ranking conflicts can arise if one relies on IRR instead of NPV when The first...
When do ranking conflicts arise in IRR versus NPV? Group of answer choices When the first...
When do ranking conflicts arise in IRR versus NPV? Group of answer choices When the first cash flow is negative and the remaining cash flows are positive. When projects are independent of one another. When projects are mutually exclusive and the cost of capital is to the left of the crossover point. All of the above can result in conflicts.
D l Question 1 When calculating incremental cash flows, we should include O interest O financing...
D l Question 1 When calculating incremental cash flows, we should include O interest O financing expenses Q sunk costs opportunity costs | Question 2 2 pts The cash flows that occur just because of a new project are called O marginal cash flows o project cash flos e additional cash flows O incremental cash flows 2 pts D | Question 3 Sun Corp. uses a discount rate of 6% for below-average risk projects, 8% for average-risk projects, and 10%...
IRR A project's internal rate of return (IRR) is the -Select- The IRR is an estimate...
IRR A project's internal rate of return (IRR) is the -Select- The IRR is an estimate of the project's rate of return, and it is comparable to the -Select-on a bond. The equation for calculating the IRR is: ;that forces the PV of its inflows to equal its cost. CF2 CFN 1 IRF 1 IRF 1IR CFt t-1 (1 +IRR) CFt is the expected cash flow in Period t and cash outflows are treated as negative cash flows. There must...
3. Identifying incremental cash flows Aa Aa E When firms make capital budgeting decisions, they should...
3. Identifying incremental cash flows Aa Aa E When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's fixed-asset expenditures Changes in net working capital associated with the project The project's depreciation expense The project's financing costs Indirect cash flows often affect a firm's capital budgeting decisions. However,...
СР, 0 A project's internal rate of return (IRR) is the -Select- that forces the PV...
СР, 0 A project's internal rate of return (IRR) is the -Select- that forces the PV of its inflows to equal its cost. The IRR is an estimate of the project's rat of return, and it is comparable to the - Select on a bond. The equation for calculating the IRR is: NPV = CF. + CF + СР + ... + =0 (1 + IRR) (1 + ru (1 + R) CF (1 + IRR) CFt is the expected...
A project's NPV profile graph intersects the Y-axis at 0% cost of capital and intersects the...
A project's NPV profile graph intersects the Y-axis at 0% cost of capital and intersects the X-axis at the project's Select (where NPV = 0). The Y-axis intersection point represents the project's undiscounted NPV. The point at which 2 projects' profiles cross one another is the crossover rate. The crossover rate can be found by calculating the Select of the differences in the projects' cash flows (Project Delta). A Select NPV profile indicates that increases in the cost of capital...
1. When determining relevant cash flows for project evaluation, we should _____. a. discount interest expenses...
1. When determining relevant cash flows for project evaluation, we should _____. a. discount interest expenses to the present b. subtract interest expenses from EBIT c. ignore interest expenses d. add back in interest expenses after subracting taxes 2. When calculating incremental cash flows, we should exclude _____. a. side effects b. taxes c. opportunity costs d. sunk costs 3. When calculating incremental cash flows, we should include _____. a. interest b. sunk costs c. financing expenses d. opportunity costs...
NPV
2. Projects A and B have identical expected lives and identical initial cash outflows (costs). However, most of one project’s cash flows come in the early years, whilemost of the other project’s cash flows occur in the later years. The two NPV profiles are given below:Which of the following statements is CORRECT?a. More of Project A’s cash flows occur in the later years.b. More of Project B’s cash flows occur in the later years.c. We must have information on the...
14) In a before-tax analysis of a project, which of the following would not affect NPV?...
14) In a before-tax analysis of a project, which of the following would not affect NPV? an increase a change in the estimated scrap value of an asset used solely in the project a change in the expected life of the project a change in the discount rate for the project money already spent on designs for the project in the working capital requirements for the project. a. b. c. d. e. 15) Which of the following ratios gives the...
Capital Budgeting Decision Criteria: IRR IRR A project's internal rate of return (IRR) is the -Select-compound...
Capital Budgeting Decision Criteria: IRR IRR A project's internal rate of return (IRR) is the -Select-compound ratediscount raterisk-free rateCorrect 1 of Item 1 that forces the PV of its inflows to equal its cost. The IRR is an estimate of the project's rate of return, and it is comparable to the -Select-YTMcoupongainCorrect 2 of Item 1 on a bond. The equation for calculating the IRR is: CFt is the expected cash flow in Period t and cash outflows are treated...
D l Question 1 When calculating incremental cash flows, we should include O interest O financing expenses Q sunk costs opportunity costs | Question 2 2 pts The cash flows that occur just because of a new project are called O marginal cash flows o project cash flos e additional cash flows O incremental cash flows 2 pts D | Question 3 Sun Corp. uses a discount rate of 6% for below-average risk projects, 8% for average-risk projects, and 10%...
IRR A project's internal rate of return (IRR) is the -Select- The IRR is an estimate of the project's rate of return, and it is comparable to the -Select-on a bond. The equation for calculating the IRR is: ;that forces the PV of its inflows to equal its cost. CF2 CFN 1 IRF 1 IRF 1IR CFt t-1 (1 +IRR) CFt is the expected cash flow in Period t and cash outflows are treated as negative cash flows. There must...
3. Identifying incremental cash flows Aa Aa E When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's fixed-asset expenditures Changes in net working capital associated with the project The project's depreciation expense The project's financing costs Indirect cash flows often affect a firm's capital budgeting decisions. However,...
СР, 0 A project's internal rate of return (IRR) is the -Select- that forces the PV of its inflows to equal its cost. The IRR is an estimate of the project's rat of return, and it is comparable to the - Select on a bond. The equation for calculating the IRR is: NPV = CF. + CF + СР + ... + =0 (1 + IRR) (1 + ru (1 + R) CF (1 + IRR) CFt is the expected...
A project's NPV profile graph intersects the Y-axis at 0% cost of capital and intersects the X-axis at the project's Select (where NPV = 0). The Y-axis intersection point represents the project's undiscounted NPV. The point at which 2 projects' profiles cross one another is the crossover rate. The crossover rate can be found by calculating the Select of the differences in the projects' cash flows (Project Delta). A Select NPV profile indicates that increases in the cost of capital...
14) In a before-tax analysis of a project, which of the following would not affect NPV? an increase a change in the estimated scrap value of an asset used solely in the project a change in the expected life of the project a change in the discount rate for the project money already spent on designs for the project in the working capital requirements for the project. a. b. c. d. e. 15) Which of the following ratios gives the...
Most questions answered within 3 hours.
-
The cheetah is one of the fastest accelerating animals, for it
can go from rest to...
asked 2 minutes ago -
CaCO3 (s) ⇌ CaO (s) + CO2 (g)
At 637 °C, the reaction reaches equilibrium.
If...
asked 55 minutes ago -
The condensate from a steam distillation contains 12.0 g of
compound A and 18.0 g of...
asked 3 hours ago -
A major economic benefit of fixed exchange rates compared to
floating rates is that
a. the...
asked 4 hours ago -
1) For this reaction,
SiCl4 (l)+ 2H2O(g) <->
SiO2 (s) + 4HCl (g) DeltaH = -127 KJ...
asked 4 hours ago -
Which of the following does NOT add to US GDP? A. Saudi Arabia
buys fighter jets...
asked 5 hours ago -
2. Describe market equilibrium in terms of the following
characteristics
d.
How supply and demand interactions...
asked 5 hours ago -
1a. Create a class named Computer
- Separate declaration from implementation (i.e. Header and CPP
files)...
asked 5 hours ago -
A medical researcher
believes that a drug changes the body's temperature. Seven test
subjects are randomly...
asked 6 hours ago -
A call option on Project Cash Flow Consulting Inc.'s stock (PCF)
has a market price of...
asked 6 hours ago -
A study on the latest fad diet claimed that the amounts of
weight lost by all...
asked 6 hours ago -
give examples of how gene expression is inherited to the next
generation?
asked 6 hours ago