Please explain the answer.Homework Answers
NPV = Present value of cash inflows – Present value of cash outflows
If discount rates increase, The NPV will reduce further as the present value of cash inflows will decline
Since NPV is less than 0, the project will never pay back on discounted basis
IRR will not change as required rate of return does not affect IRR
Hence, the answer is c. II only
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Please explain the answer.
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Show all work and highlight final answer. Do not answer the question unless you answer all...
Show all work and highlight final answer. Do not answer the
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Please explain the answer.
The Murka's project requires initial investments of $77 and its NPV is greater than zero. If the project has conventional cash flows and discount rate is above zero, then: The profitability index is greater than 1 The IRR is less than the firm's required rate of return The undiscounted payback period is shorter than the project's life. II ll only A) ll only B) I and Il only C) I and IIl only D) Il and...
A project requires, as its only cost, an initial investment of
$17,000. It then generates positive future cash flows. The
appropriate discount rate is 22%. This project has an NPV of -$935
(negative NPV). What can you say about this project’s IRR?
A project requires, as its only cost, an initial investment of $17,000. It then generates positive future cash flows. The appropriate discount rate is 22%. This project has an NPV of -$935 (negative NPV). What can you say...
Show all work and highlight final answer. Do not answer the
question unless you answer all of them.
4. Which one of the following will decrease the net present value of a project? (a) Increasing the value of each of the project's discounted cash inflows (b) Moving each of the cash inflows forward to a sooner time period (c) Decreasing the required discount rate (d) Increasing the project's initial cost at time zero 5. Which of the following is true...
Problem 6-15 Project NPV and IRR A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $26,700 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 9%. Ignore inflation. a. Calculate project...
A firm is considering investing in a project that requires an initial investment of $200,000 and is expected to produce cash inflows of $60,000, $80,000, and $100,000 in first, second, and third years. There will be no residual value. The firm applies a discount rate of 10%. Discount factors for Year 1, 2 and 3 are 0.909, 0.826, and 0.751 respectively. Required: i) Calculate the NPV of the project. ii) Explain the meaning of NPV and its advantages as an...
Question 15 answered
a. If the company requires a 12 percent return on its investments, should it accept this project? Why? b. Compute the IRR for this project. How many IRRs are there? Using the IRR decision rule, should the company accept the project? What's going on here? 5. Calculating Profitability Index (LO7) What is the profitability index for the following set of cash flows if the relevant discount rate is 10 percent? What if the discount rate is 15...
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