Homework Answers
50.
The answer is -8671
51.
=RATE(nper,pmt,pv)
=RATE(3,40000,-100000)
=9.70%
The answer is 10%
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D. Calculate the profitability index. What is the net present value of a project with a...
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments...
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project x1 Project x2 Initial investment $(108,000) $(176,000) Expected net cash flows in year: 39,000 81,000 49,500 71,000 74,500 61,000 1 2 3 a. Compute each project's net present value....
17. If the profitably index for a project exceeds 1, then the project's net present value...
17. If the profitably index for a project exceeds 1, then the project's net present value is positive a. b. internal rate of return is less than the projects's disount rate. payback period is less than 5 years. d. c. Accounting rate of return is greater than the project's rate of return. 18. If a project's profitability index is less than 1, the project's a. discount rate is above its cost of capital. b. Internal rate of return is less...
Calculate the payback period, internal rate of return, net present value, and profitability index of proposed...
Calculate the payback period, internal rate of return, net
present value, and profitability index of proposed projects. Select
one project after doing the above analysis and justify the
selection.
r 0.185 Year 3 A CF 0 -425000 1 60000 2 100000 135000 4 140000 5 220000 170000 90000 70000 90000 LDN 00 9 00 r 0.185 Year 3 B CF 0 -475000 1 90000 2 110000 120000 4 150000 230000 180000 110000 8 75000 45000 10 75000 הטן וס[ 4...
A project with an initial investment of $90,000 and a profitability index of 1.510 also has...
A project with an initial investment of $90,000 and a profitability index of 1.510 also has an internal rate of return of 10%. The present value of the net cash flows is:
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments...
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project x1 Project x2 Initial investment $(108,000) $(176,000) Expected net cash flows in year: 39,000 81,000 49,500 71,000 74,500 61,000 1 2 3 a. Compute each project's net present value....
Project LMK requires an initial outlay of $400,000 and has a profitability index of 1.5. The...
Project LMK requires an initial outlay of $400,000 and has a profitability index of 1.5. The project is expected to generate equal annual cash flows over the next twelve years. The required return for this project is 20%. What is project LMK's net present value? A. $600,000 B. $80,000 C. $120,000 D. $150,000 i found the same solution but the different answers so please can you check it for me
EXCEL SOLUTION NEEDED PLEASE: EXCEL FORMULA The profitability index is the present value of the future...
EXCEL SOLUTION NEEDED PLEASE: EXCEL FORMULA The profitability index is the present value of the future cash flows divided by the initial investment. If you remember, the NPV function really only calculates the present value of future cash flows, so we will use the NPV function divided by the initial investment to calculate the profitability index as follows: Suppose we have a project with the following cash flows and required return. What is the profitability index of the project? t...
Net present value and Profitability Index of each Project
Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% return from its investments. FV of $1, PVA of SI and FVA of SJ (use appropriate factor(s) from the tables provided.)
49, see
Initial investment
Expected net cash f lows in:
Year I
Year 2
Year 3
Project XI
$ (108, aøe)
39 , aøe
74, see
Project X2
81,øeø
71,øeø
61,øeo
a. Compute each project's net present value.
b. Compute each project's...
Exercise 24-11 Net present value, profitability index LO P3 Following is information on two alternative investments...
Exercise 24-11 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires a 6% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 $ (84,000) Project X2 $ (128,000) Initial investment Expected net cash flows in year: 27,000 37,500 62,500 63,000 53,000 43,000 a. Compute each project's net present value. b....
Net Present Value and Other Capital Budgeting Measures 4. Compute the Net Present Value (NPV), Internal...
Net Present Value and Other Capital Budgeting Measures 4. Compute the Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), and Payback statistic for the project with the cash flows given below. Recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 percent and the maximum allowable payback is 4 years. Time: Cash flow: 0 -2,100 1 350 2 700 3 800 4...
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project x1 Project x2 Initial investment $(108,000) $(176,000) Expected net cash flows in year: 39,000 81,000 49,500 71,000 74,500 61,000 1 2 3 a. Compute each project's net present value....
17. If the profitably index for a project exceeds 1, then the project's net present value is positive a. b. internal rate of return is less than the projects's disount rate. payback period is less than 5 years. d. c. Accounting rate of return is greater than the project's rate of return. 18. If a project's profitability index is less than 1, the project's a. discount rate is above its cost of capital. b. Internal rate of return is less...
Calculate the payback period, internal rate of return, net
present value, and profitability index of proposed projects. Select
one project after doing the above analysis and justify the
selection.
r 0.185 Year 3 A CF 0 -425000 1 60000 2 100000 135000 4 140000 5 220000 170000 90000 70000 90000 LDN 00 9 00 r 0.185 Year 3 B CF 0 -475000 1 90000 2 110000 120000 4 150000 230000 180000 110000 8 75000 45000 10 75000 הטן וס[ 4...
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project x1 Project x2 Initial investment $(108,000) $(176,000) Expected net cash flows in year: 39,000 81,000 49,500 71,000 74,500 61,000 1 2 3 a. Compute each project's net present value....
Exercise 24-11 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires a 6% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 $ (84,000) Project X2 $ (128,000) Initial investment Expected net cash flows in year: 27,000 37,500 62,500 63,000 53,000 43,000 a. Compute each project's net present value. b....
Net Present Value and Other Capital Budgeting Measures 4. Compute the Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), and Payback statistic for the project with the cash flows given below. Recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 percent and the maximum allowable payback is 4 years. Time: Cash flow: 0 -2,100 1 350 2 700 3 800 4...
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