ZuoTi.Pro
Question

1) You are presented with three projects, each with its initial investment and subsequent returns. Project Project A -9500 EG

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Pls see the table below.

A B C
0 -9500 -6000 -29950
1 11500 1250 5900
2 11500 1490 6000
3 11500 1490 6100
4 11500 1490 6200
5 11500 1490 6300
6 11500 1490 6400
NPV 29584 -495 -5937
(NPV(0.15, Cash Flow range)
IRR 120% 11% 6%
(IRR(Cash Flow range, guess)

a) NPV for the three projects using 15% discount rate would be 29584, -495 and -5937 respectively

b) IRR for the three projects is 120%, 11% and 6% respectively

c) Clearly project A should be chosen since it gives the highest NPV and IRR

0 0
Add a comment
Know the answer?
Add Answer to:
1) You are presented with three projects, each with its initial investment and subsequent returns. Project...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • thank you so much! You are choosing between two projects. The cash flows for the projects...

    thank you so much! You are choosing between two projects. The cash flows for the projects are given in the following table ($ million) Project Year 1 Year 4 Year 0 - $52 - $100 Year 2 $22 $25 Year 3 $20 $52 $22 $59 a. What are the IRRs of the two projects? b. If your discount rate is 5.4%, what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently?...

  • You are choosing between two projects. The cash flows for the projects are given in the...

    You are choosing between two projects. The cash flows for the projects are given in the following table ($ milion); Project Year Year 2 Year o -$48 - $101 Year 3 $21 $50 Year 4 $14 $27 $20 $40 $62 Tes a What are the IRRs of the two projects? b. If your discount rate is 4.7%, what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? a. What are the...

  • You are choosing between two projects. The cash flows for the projects are given in the...

    You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 - $50 $18 $19 $17 - $101 $21 $40 $51 $26 $59 a. What are the IRRs of the two projects? b. If your discount rate is 5.1%, what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? a. What...

  • Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment...

    Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and​ after-tax cash inflows associated with these projects are shown in the following table. Cash flows Project A Project B Project C Initial investment​ (CF) ​$60000 ​$100000 ​$110000 Cash inflows​ (CF), t equals1 to 5: ​$20000 ​$31500 ​$32500 a.  Calculate the payback period for each project. b.  Calculate the net present value​ (NPV) of each​ project, assuming that the firm has a cost of...

  • You have been presented with 6 projects. All projects are 7-year projects. NPV Net present value....

    You have been presented with 6 projects. All projects are 7-year projects. NPV Net present value. IRR = internal rate of return. MIRR = modified internal rate of return. PI profitability index. Project F ($18,539) Project G $23,725 Project C $3,327 Project D $8,876 Project B $11,041 Project A $52,715 NPV 18.13% 11.77% 15.24% 43.46% 30.18% 21.71% IRR= 15.84% 12.97% 24.83% 20.12% 14.36% 17.16% MIRR= 0.94 1.12 1.02 1.89 1.44 1.21 Pl- If all projects are independent, which project or...

  • Project A requires an immediate investment of $8000 and another $6000 in three years. Net returns...

    Project A requires an immediate investment of $8000 and another $6000 in three years. Net returns are $4000 after two years, $12,000 after four years, and $8000 after six years. Project B requires an immediate investment of $4000, another $6000 after two years, and $4000 after four years. Net returns are $3400 per year for seven years. Determine the net present value at 10%. Which project is preferable according to the net present value criterion? ANS: PROJECT A NPV= $3510...

  • 1. Consider two projects with the following (after-tax) cash flows. Project A: CF1 50, CF2 55,...

    1. Consider two projects with the following (after-tax) cash flows. Project A: CF1 50, CF2 55, CF3 85. Project B: CF1 140. Both projects require an initial investment of 100. Assume the cost of capital for both projects is r 5%. (a) Compute NPV and IRR for project A. (b) Compute NPV and IRR for project B. (c) Assume you replicate project B twice, i.e. reinvest 100 in t 1 and t2. Compute the NPV and IRR of the replicated...

  • A project requires, as its only cost, an initial investment of $17,000. It then generates positive future cash flows. Th...

    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...

  • QUESTION THREE A. A company is considering two alternative investment projects both of which have a...

    QUESTION THREE A. A company is considering two alternative investment projects both of which have a positive net present value. The projects have been ranked on the basis of both net present value (NPV) and internal rate of return (IRR). The result of the ranking is shown below: Project A Project B NPV Ist 2nd IRR 2nd 1st Discuss any four (4) potential reasons why the conflict between the NPV and IRR ranking may have arisen. (12 marks) B. Kumi...

  • Nicholson Roofing​ Materials, Inc., is considering two mutually exclusive​ projects, each with an initial investment of...

    Nicholson Roofing​ Materials, Inc., is considering two mutually exclusive​ projects, each with an initial investment of ​$100000. The​ company's board of directors has set a​ 4-year payback requirement and has set its cost of capital at 12​%. The cash inflows associated with the two projects are shown in the following​ table: YR Project A Project B 1 30000 85000 2 30000 50000 3 30000 10000 4 30000 10000 5 30000 10000 6 30000 10000 .a. Calculate the payback period for...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT