Homework Answers
D. 18%
At 18% of IRR, Present value of cash inflows are higher than present value of cash outflow or Net present value will be higher than cash outflow. Therefore, we accept the project when the internal rate of return will be 18%.
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Consider the following cash flow and compute the approximate IRR for the investment: Net Cash Flow...
Compute the IRR on the following cash flow streams: a. An initial investment of $28,962 followed...
Compute the IRR on the following cash flow streams: a. An initial investment of $28,962 followed by a single cash flow of $40,390 in year 6. (Round intermediate calculations to 4 decimal places, e.g. 1.2512 and final answer to 2 decimal places, e.g. 15.25%.) IRR b. An initial investment of $988,597 followed by a single cash flow of $1,565,600 in year 4. (Round intermediate calculations to 4 decimal places, e.g. 1.2512 and final answer to 2 decimal places, e.g. 15.25%.)...
Consider the following two projects: Year Cash Flow (Beta) &nbs
Consider the following two projects: Year Cash Flow (Beta) Cash Flow (Zeta) 0 −$25,000 −$28,000 1 12,000 14,000 2 10,000 13,000 3 9,000 11,000 Instructions: 1. Using company cost of capital 15%, calculate the following investment criteria for both projects: a. Payback period b. Net Present Value (NPV) c. Internal Rate of Return (IRR) d. Profitability Index (PI) 2. If projects Beta and Zeta are independent, which one(s) will you choose? Why? 3. If projects Beta...
-Return Analysis Consider the investment project with the net cash flows as shown in the follow-...
-Return Analysis Consider the investment project with the net cash flows as shown in the follow- ing table. What would be the value of X if the project's IRR is 23 %? 7s.4 End of Year (n) Net Cash Flow -$12,000 $2,500 $5,500 $X 4 (a) $4,500 (b) $4,750 (c) $6.890 (d) $6,500
Determine the IRR of the following: An initial investment of $12,000 resulting in a free cash...
Determine the IRR of the following: An initial investment of $12,000 resulting in a free cash flow of $7,000 at the end of year 1 through 5 and $8,000 at the end of year 6.
Consider two investments A and B with the following sequences of cash flows: Net Cash Flow...
Consider two investments A and B with the following sequences of cash flows: Net Cash Flow Project A Project B -$111000 -$102000 22000 13000 22000 13000 111000 108000 (a) Compute the IRR for each investment. Project A: IRR = Project B: IRR = (keep 2 decimal places in numerical results) (b) At MARR = 59%, determine the acceptability of each project. Project A: Project B: (c) If A and B are mutually exclusive projects, which project is better, based on...
14. Consider four projects with the following sequences of cash flows: n 0 NET CASH FLOWS...
14. Consider four projects with the following sequences of cash flows: n 0 NET CASH FLOWS A B C -$25,000|-$23,000-$56,500 $12,000 $32,000 -$2,500 $23,000 $32,000-$6,459 $34,000 $25,000 $88,345 3 (a) Identify all the simple investments. (b) Identify all the non-simple investments. (c) Compute the Internal Rate of Return (IRR) for each project using NPV method and Excel. Note the following: A simple (or conventional) investment is simply when one sign change occurs in the net cash flow series. If the...
DO 5.75 PLEASE 5.71 Consider the following cash flow of a certain project: Net Cash Flow...
DO 5.75 PLEASE
5.71 Consider the following cash flow of a certain project: Net Cash Flow n 0 -$2000 1 800 2 900 3 If the project's IRR is 10%, (a) Find the value of X. (b) Is this project acceptable at MARR = 8%? 5.75 Recent technology has made possible a computerized vending machine that . grind coffee beans and brew fresh coffee on demand. The computer also makes can possible such complicated functions as changing $5 and $10...
Net cash flow and timeline depiction For each of the following projects, determine the net cash...
Net cash flow and timeline depiction For each of the following projects, determine the net cash flows, and depict the cash flows on a time line. a. A project that requires an initial investment of $120,000 and will generate annual operating cash inflows of $25,000 for the next 18 years. In each of the 18 years, maintenance of the project will require a $5,000 cash outflow. b. A new machine with an installed cost of $85,000. Sale of the old...
You must know all the cash flows of an investment project to compute its NPV, IRR,...
You must know all the cash flows of an investment project to compute its NPV, IRR, PI and payback period OA NPV, PI, IRR ОВ. Ос. OD IRR, PI payback period and discount payback period NPV, IRR, PI payback period, and discount payback period IRR, PI and payback period NPV, IRR, PI and discount payback period OE. OF.
1. Compute the payback period, the ARR, the NPV, and the approximate IRR of this investment....
1.
Compute the payback period, the ARR, the NPV, and the
approximate IRR of this investment. (If you use the tables to
compute the IRR, answer with the closest interest rate shown in
the tables.)
2.
Recommend whether the company should invest in this project.
Rapid Wave is considering purchasing a water park in Oakland, California, for $1,950,000. The new facility will generate annual net cash inflows of $500,000 for eight years. Engineers estimate that the facility will remain useful...
Compute the IRR on the following cash flow streams: a. An initial investment of $28,962 followed by a single cash flow of $40,390 in year 6. (Round intermediate calculations to 4 decimal places, e.g. 1.2512 and final answer to 2 decimal places, e.g. 15.25%.) IRR b. An initial investment of $988,597 followed by a single cash flow of $1,565,600 in year 4. (Round intermediate calculations to 4 decimal places, e.g. 1.2512 and final answer to 2 decimal places, e.g. 15.25%.)...
-Return Analysis Consider the investment project with the net cash flows as shown in the follow- ing table. What would be the value of X if the project's IRR is 23 %? 7s.4 End of Year (n) Net Cash Flow -$12,000 $2,500 $5,500 $X 4 (a) $4,500 (b) $4,750 (c) $6.890 (d) $6,500
Consider two investments A and B with the following sequences of cash flows: Net Cash Flow Project A Project B -$111000 -$102000 22000 13000 22000 13000 111000 108000 (a) Compute the IRR for each investment. Project A: IRR = Project B: IRR = (keep 2 decimal places in numerical results) (b) At MARR = 59%, determine the acceptability of each project. Project A: Project B: (c) If A and B are mutually exclusive projects, which project is better, based on...
14. Consider four projects with the following sequences of cash flows: n 0 NET CASH FLOWS A B C -$25,000|-$23,000-$56,500 $12,000 $32,000 -$2,500 $23,000 $32,000-$6,459 $34,000 $25,000 $88,345 3 (a) Identify all the simple investments. (b) Identify all the non-simple investments. (c) Compute the Internal Rate of Return (IRR) for each project using NPV method and Excel. Note the following: A simple (or conventional) investment is simply when one sign change occurs in the net cash flow series. If the...
DO 5.75 PLEASE
5.71 Consider the following cash flow of a certain project: Net Cash Flow n 0 -$2000 1 800 2 900 3 If the project's IRR is 10%, (a) Find the value of X. (b) Is this project acceptable at MARR = 8%? 5.75 Recent technology has made possible a computerized vending machine that . grind coffee beans and brew fresh coffee on demand. The computer also makes can possible such complicated functions as changing $5 and $10...
Net cash flow and timeline depiction For each of the following projects, determine the net cash flows, and depict the cash flows on a time line. a. A project that requires an initial investment of $120,000 and will generate annual operating cash inflows of $25,000 for the next 18 years. In each of the 18 years, maintenance of the project will require a $5,000 cash outflow. b. A new machine with an installed cost of $85,000. Sale of the old...
You must know all the cash flows of an investment project to compute its NPV, IRR, PI and payback period OA NPV, PI, IRR ОВ. Ос. OD IRR, PI payback period and discount payback period NPV, IRR, PI payback period, and discount payback period IRR, PI and payback period NPV, IRR, PI and discount payback period OE. OF.
1.
Compute the payback period, the ARR, the NPV, and the
approximate IRR of this investment. (If you use the tables to
compute the IRR, answer with the closest interest rate shown in
the tables.)
2.
Recommend whether the company should invest in this project.
Rapid Wave is considering purchasing a water park in Oakland, California, for $1,950,000. The new facility will generate annual net cash inflows of $500,000 for eight years. Engineers estimate that the facility will remain useful...
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