Which of the following is the discount rate that makes the present value of the estimated cash flows equal to the initia...
Which of the following is the discount rate that makes the present value of the estimated cash flows equal to the initial cost of the investment?
Modified internal rate of return
Internal rate of return
Discounted payback period
Payback period
Net present value
Homework Answers
Answer - Internal rate of return
Internal rate of return is the discount rate that makes PV of future expected cash flows equal to the initial cash investment.
Add Answer to:
Which of the following is the discount rate that makes the present value of the estimated cash flows equal to the initia...
The length of time required for an investment to generate cash flows sufficient to recoup the...
The length of time required for an investment to generate cash flows sufficient to recoup the initial cost of the investment is called the a. Net present value b. Profitability index c. Payback period d. Internal rate of return e. Discounted cash period
1. For the following cash flow using a discount rate of 6%, compute the following items:...
1. For the following cash flow using a discount rate of 6%, compute the following items: a) Present worth b) Future worth (at the end of year 10) c) Equivalent annual worth d) Internal rate of return e) Modified internal rate of return at a 10% borrowing and reinvestment rate f) Payback period (non-discounted) g) Payback period (discounted at discount rate) 0 $ 1 $ 2 $ 3 $ 4 $ 5 $ 6 $ 7 $ 8s 9 $...
A. The excess of the present value of future cash flows over the initial investment outlay...
A. The excess of the present value of future cash flows over the initial investment outlay for a project is the: 1. Internal rate of return (IRR) of the project 2. Modified internal rate of return (MIRR) on the project 3. Book (accounting) rate of return for the project 4. Net present value (NPV) of the project 5. Modified internal rate of return (MIRR) of the project B. Items that have cash flow effects during the operating phase of an...
d Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is...
Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z Initial investment $69,000 $69,000 $69,000 Cash flow from operations Year 1 60,000 34,500 69,000 Year 2 9,000 34,500 Year 3 33,500 33,500 Disinvestment 0. Life (years) 3 years 3 years 1 year(a) Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and...
Ranking Investment Proposals:Payback Period, Accounting Rate of Return, and Net Present Value Presented is information...
Ranking Investment Proposals:Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z Initial investment $81,000 $81,000 $81,000 Cash flow from operations Year 1 80,000 40,500 81,000 Year 2 1,000 40,500 Year 3 41,000 41,000 Disinvestment Life (years) 3 years 3 years 1 year 0 (a) Select the best investment proposal using the payback period, the accounting rate of return on...
The IRR evaluation method assumes that cash flows from the project are reinvested at the same...
The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project's IRR. Consider the following situation: Celestial Crane Cosmetics is analyzing a project that requires an initial investment of $2,750,000. The project's expected cash flows are: Year Year 1...
(Discounted payback period) Gio's Restaurants is considering a project with the following expected cash flows: Year...
(Discounted payback period) Gio's Restaurants is considering a project with the following expected cash flows: Year Project Cash Flow (millions) $(240) 72 80 95 If the project's appropriate discount rate is 11 percent, what is the project's discounted payback period? The project's discounted payback period is years. (Round to two decimal places.) (Discounted payback period) The Callaway Cattle Company is considering the construction of a new feed handling system for its feed lot in Abilene, Kansas. The new system will...
For the following cash flows, compute the following assuming a 10% interest rate: PW EAW FW...
For the following cash flows, compute the following assuming a 10% interest rate: PW EAW FW Discounted payback period (year at which the sum of or cumulative PW of cash flows in years 1 through N = initial investment) Benefit / Cost Ratio Find Internal rate of return of the cash flows Year Cash Flow 0 -4000 1 250 2 500 3 750 4 1000 5 1250 6 1500
Using information about the estimated costs, estimated benefits and a discount rate of 9% for Project...
Using information about the estimated costs, estimated benefits and a discount rate of 9% for Project XYZ, calculate the discount factor for each year, the discounted costs, the discounted benefits, the return-on-investment (ROI) and the net-present value (NPV). In which year does the payback occurs? Total | O 175,000 ? ? Estimated Costs Discount Factor Discounted Costs | 22.500,7 22,500 ? ? Year 2 | 22,500 ? ? 3 | 22,500 ? ? 4 22,500 ? ? | 5 |...
Which of the following statements about investment decision models is true?(calculation steps are not needed)a)The discounted...
Which of the following statements about investment decision models is true?(calculation steps are not needed)a)The discounted payback rate takes into account cash flows for all periods.b)The payback rule ignores all cash flows after the end of the payback period. c)The net present value model says to accept investment opportunities when their rates of return exceed the company’s incremental borrowing rate.d)The internal rate of return rule is to accept the investment if the opportunity cost of capital is greater than the...
1. For the following cash flow using a discount rate of 6%, compute the following items: a) Present worth b) Future worth (at the end of year 10) c) Equivalent annual worth d) Internal rate of return e) Modified internal rate of return at a 10% borrowing and reinvestment rate f) Payback period (non-discounted) g) Payback period (discounted at discount rate) 0 $ 1 $ 2 $ 3 $ 4 $ 5 $ 6 $ 7 $ 8s 9 $...
Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z Initial investment $69,000 $69,000 $69,000 Cash flow from operations Year 1 60,000 34,500 69,000 Year 2 9,000 34,500 Year 3 33,500 33,500 Disinvestment 0. Life (years) 3 years 3 years 1 year(a) Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and...
Ranking Investment Proposals:Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z Initial investment $81,000 $81,000 $81,000 Cash flow from operations Year 1 80,000 40,500 81,000 Year 2 1,000 40,500 Year 3 41,000 41,000 Disinvestment Life (years) 3 years 3 years 1 year 0 (a) Select the best investment proposal using the payback period, the accounting rate of return on...
The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project's IRR. Consider the following situation: Celestial Crane Cosmetics is analyzing a project that requires an initial investment of $2,750,000. The project's expected cash flows are: Year Year 1...
(Discounted payback period) Gio's Restaurants is considering a project with the following expected cash flows: Year Project Cash Flow (millions) $(240) 72 80 95 If the project's appropriate discount rate is 11 percent, what is the project's discounted payback period? The project's discounted payback period is years. (Round to two decimal places.) (Discounted payback period) The Callaway Cattle Company is considering the construction of a new feed handling system for its feed lot in Abilene, Kansas. The new system will...
Using information about the estimated costs, estimated benefits and a discount rate of 9% for Project XYZ, calculate the discount factor for each year, the discounted costs, the discounted benefits, the return-on-investment (ROI) and the net-present value (NPV). In which year does the payback occurs? Total | O 175,000 ? ? Estimated Costs Discount Factor Discounted Costs | 22.500,7 22,500 ? ? Year 2 | 22,500 ? ? 3 | 22,500 ? ? 4 22,500 ? ? | 5 |...
Most questions answered within 3 hours.
-
The income statement for the month of June, 2014 of Happy Smiles
Enterprises contains the following...
asked 38 seconds from now -
1. Choose value for p between 0.20 and 0.80. It should have at
least two decimal...
asked 1 minute ago -
QUESTIONS: 500 words for the question
In defining abnormality, the criteria of “deviance”, “distress”
and “dysfunction”...
asked 2 minutes ago -
A sample of n = 25 scores produces a t statistic of t =
-2.062. If...
asked 20 minutes ago -
Given the following, compute the after tax cost of debt: The par
value of the firms...
asked 14 minutes ago -
Coding in C. Please only use stdio.h (which would mean no malloc
or anything like that)...
asked 19 minutes ago -
Use the fundamental accounting equation to find the missing
amounts.
Scenario
Assets
Liabilities
Equity
1
$...
asked 17 minutes ago -
A population has a mean of 200 and a standard deviation of 60.
Suppose a sample...
asked 21 minutes ago -
A bicyclist starting at rest produces a constant angular
acceleration of 1.10 rad/s2 for wheels that...
asked 36 minutes ago -
The
half-life of a radioactive source is 14.0 minutes. How much time
must elapse before the...
asked 33 minutes ago -
Given P(Ec ) = 0.43, P(F) = 0.52, and P(EF) = 0.18.
Find P( E |...
asked 1 hour ago -
Consider two empty containers A and B whose volumes are
10mL and 20mL respectively. 1mL of...
asked 1 hour ago