Homework Answers
IRR =10% (IRR is the rate at which NPV of Project is equal to
0)
Since cost of capital of 7% is less than IRR of 10% NPV is
Positive. If IRR is greater than cost of capital then project
should be selected and has a positive NPV.
Option b is correct option
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An investment that the investor is considering has an internal rate of return of 10%, the...
Crow Corporation is considering an investment in a project that has an internal rate of return...
Crow Corporation is considering an investment in a project that has an internal rate of return of 20%. The project has an 8-year useful life but has no salvage value. Cash inflows from this project are $100,000 per year in each of the 8 years. Crow uses a 16 % discount rate to make capital budgeting decisions. What is the net present value of this project? $5,215 e$15,464 e$50,700 $55,831 None of the above
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If a project has an internal rate of return of 13% and a negative net present value, which of the following statements is true regarding the discount rate used for the net present value computation? O The discount rate must have been 0%. O The discount rate must have been less than 13%. O The discount rate must have been equal to 13%. O The discount rate must have been greater than 13%. Diggertown Products wants to buy a new...
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Net Present Value Method, Internal Rate of Return Method, and Analysis The management of Quest Media Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year Radio Station TV Station $410,000 $820,000 410,000 820,000 410,000 820,000 410,000 820,000 Present Value of an Annuity of $1 at Compound Interest Year 6% 3 2 0.943 1.833 .673 3.465 4.212 4.917 10% 0.909...
18. Which of the following is NOT true about the internal rate of return: A) A...
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Problem 16-19 Using net present value and internal rate of return to evaluate investment opportunities LO 16-2, 16-3 Dwight Donovan, the president of Franklin Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of five years and no salvage value. Project B supports a training program that...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The...
Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Wind Biofuel Year Turbines Equipment $180,000 $360,000 180,000 360,000 180,000 360,000 180,000 360,000 The wind turbines require an investment of $513,900, while the biofuel equipment requires an investment of $1,093,320. No residual value is expected from either project. Present Value of...
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Crow Corporation is considering an investment in a project that has an internal rate of return of 20%. The project has an 8-year useful life but has no salvage value. Cash inflows from this project are $100,000 per year in each of the 8 years. Crow uses a 16 % discount rate to make capital budgeting decisions. What is the net present value of this project? $5,215 e$15,464 e$50,700 $55,831 None of the above
If a project has an internal rate of return of 13% and a negative net present value, which of the following statements is true regarding the discount rate used for the net present value computation? O The discount rate must have been 0%. O The discount rate must have been less than 13%. O The discount rate must have been equal to 13%. O The discount rate must have been greater than 13%. Diggertown Products wants to buy a new...
net
present value method, internal rate of return method, and analysis
Net Present Value Method, Internal Rate of Return Method, and Analysis The management of Quest Media Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year Radio Station TV Station $410,000 $820,000 410,000 820,000 410,000 820,000 410,000 820,000 Present Value of an Annuity of $1 at Compound Interest Year 6% 3 2 0.943 1.833 .673 3.465 4.212 4.917 10% 0.909...
18. Which of the following is NOT true about the internal rate of return: A) A good project is one with IRR greater than the required return. B) IRR is the discount rate that results in a zero net present value for the project. C) Crossover rate for two projects is the IRR of the project with the difference of the cash flows of the two projects.. D) For two projects of the same size, IRR will usually choose the...
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Net Present Value Method, Internal Rate of Return Method, and Analysis for a Service Company The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Wind Biofuel Year Turbines Equipment $180,000 $360,000 180,000 360,000 180,000 360,000 180,000 360,000 The wind turbines require an investment of $513,900, while the biofuel equipment requires an investment of $1,093,320. No residual value is expected from either project. Present Value of...
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