Nichols Inc. is considering a project that has the following
cash flow data. What is the project's IRR? Note that a project's
IRR can be less than the cost of capital or negative, in both cases
it will be rejected.
Year |
0 |
1 |
2 |
3 |
4 |
5 |
Cash flows |
−$1,250 |
$325 |
$325 |
$325 |
$325 |
$325 |
|
|||
|
|||
|
|||
|
|||
|
Westwood Painting Co. is considering a project that has the
following cash flow and cost of capital (r) data. What is the
project's MIRR? Note that a project's MIRR can be less than the
cost of capital (and even negative), in which case it will be
rejected.
r. | 12.25% | ||||
Year |
0 |
1 |
2 |
3 |
4 |
Cash flows |
−$850 |
$300 |
$320 |
$340 |
$360 |
|
|||
|
|||
|
|||
|
|||
|
Worthington Inc. is considering a project that has the following
cash flow data. What is the project's payback?
Year |
0 |
1 |
2 |
3 |
Cash flows |
−$500 |
$150 |
$200 |
$300 |
|
|||
|
|||
|
|||
|
|||
|
Craig's Car Wash Inc. is considering a project that has the
following cash flow and cost of capital (r) data. What is the
project's discounted payback?
r. | 10.00% | |||
Year |
0 |
1 |
2 |
3 |
Cash flows |
−$900 |
$500 |
$500 |
$500 |
|
|||
|
|||
|
|||
|
|||
|
1)
IRR is the rate of return that makes initial investment equal to present value of cash inflows
Initial investment = Annuity * [1 - 1 / (1 + r)n] /r
1250 = 325 * [1 - 1 / (1 + r)5] /r
Using trial and error method, i.e., after trying various values for R, lets try R as 9.43%
1250 = 325 * [1 - 1 / (1 + 0.0943)5] /0.0943
1250 = 325 * 3.846639
1250 = 1,250
Therefore, IRR is 9.43%
2)
Future value of year 1 cash flow = 300 (1 + 0.1225)3 = 424.307105
Future value of year 2 cash flow = 320 (1 + 0.1225)2 = 403.202
Future value of year 3 cash flow = 340 (1 + 0.1225)1 = 381.65
Future value of year 4 cash flow = 360 (1 + 0.1225)0 = 360
424.307105 + 403.202 + 381.65 + 360 = 1,569.1591
MIRR = (FV / initial investment)1/n - 1
MIRR = (1,569.1591 / 850)1/4 - 1
MIRR = 1.1656 - 1
MIRR = 0.1656 or 16.56%
3)
Cumulative cash flow for year 0 = -500
Cumulative cash flow for year 1 = -500 + 150 = -350
Cumulative cash flow for year 2 = -350 + 200 = -150
Cumulative cash flow for year 3 = -150 + 300 = 150
150 / 300 = 0.5
Project's payback = 2 + 0.5 = 2.50 years
4)
Present value of year 1 cash flow = 500 / (1 + 0.1)1 = 454.5455
Present value of year 2 cash flow = 500 / (1 + 0.1)2 = 413.22314
Present value of year 3 cash flow = 500 / (1 + 0.1)3 = 375.6574
Cumulative cash flow for year 0 = -900
Cumulative cash flow for year 1 = -900 + 454.5455 = -445.4545
Cumulative cash flow for year 2 = -445.4545 + 413.22314 = -32.23136
Cumulative cash flow for year 3 = -32.23136 + 375.6574 = 343.43
32.23136 / 375.6574 = 0.09
Discounted payback = 2 + 0.09 = 2.09 years
Nichols Inc. is considering a project that has the following cash flow data. What is the...
1. Corner Jewelers, Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the cost of capital or negative, in both cases it will be rejected. Year 0 2 دیا 5 Cash flows -$1,150 $325 $325 $325 $325 $325
1. Frye Foods is considering a project that has the following cash flow data. What is the project's IRR? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box. Year: 0 1 2 3 4 5 Cash flows: -$1,150 $325 $325 $325 $325 $325 2.Van Auken Inc. is considering a project that has the following cash flows:...
Simkins Renovations Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected. Year 0 1 2 3 4 Cash flows -$625 $300 $290 $280 $270 a. 29.04% b. 30.83% c. 32.63% d. 24.55% e. 29.94%
Mansi Inc. is considering a project that has the following cash flow data. What is the project's regular payback? Year 0 1 2 3 Cash Flow $-750 $228 $325 $350 2.36 years O 2.12 years O 2.56 years O 1.91 years O 2.85 years
Taggart Inc. is considering a project that has the following cash flow data. What is the project's payback? Year Cash flows -$925 12 $500 $500 $500 0 1.85 years 0 1.42 years 0 2.29 years O 1.96 years A firm has generated $250,000 net earnings this year. There are 100,000 shares. If the industry multiplier is 15x, what is the total value of the firm? O $150,000 $2,500,000 $3,750,000 $600,000
Question 16: McGlothin Inc. is considering a project that has the following cash flow data. What is the project's payback? Year 0 1 2 3 Cash flows −$1,150 $500 $500 $500
Warnock Inc. is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected. WACC: 10.00% Year0123Cash flows-$1,050$500$400$300 a. -$29.61 b. -$40.27 c. -$39.09 d. - $39.48 e. -$47.38
Datta Computer Systems is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected. Year 0 1 2 3 Cash flows -$1,050 $450 $470 $490 a. 12.69% b. 13.98% c. 15.58% d. 18.15% e. 16.07% 7. Is the investment in Question 6 a good investment? Yes. No. It depends on the WACC....
Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? WACC: Year Cash flows 10.00% 0 1 $925 $525 2 4 3 $445 $485 $405 a. 2.25 years b. 1.86 years c. 2.14 years d. 2.40 years e. 1.95 years
Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? WACC: Year Cash flows 10.00% 0 3 4 $925 $525 $485 $445 $405 Oa. 2.14 years b. 1.86 years c. 1.95 years d. 2.25 years e. 2.40 years