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B. Negative
NPV is calculated by subtracting present value of cash outflows from present value of cash inflows. Present value of cash inflows is calculated by discounting future cash inflows from required rate of return. The higher the present value of cash inflows, higher will b eNPV. Therefore, there is a negative relationship between NP and required rate of return.
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Question 6 of 10 10 Points The relationship between the NPV of a project, with only conventional cash flows, and th...
If an investment project (with conventional cash flows) has IRR equal to the cost of capital,...
If an investment project (with conventional cash flows) has IRR equal to the cost of capital, the NPV for that project is: Positive Negative Zero Unable to determine Question 13 (2 points) The following are measures used by firms when making capital budgeting decisions except: Payback period Internal rate of return P/E ratio 1. Net present value
Assume a project has normal (conventional) cash flows (i.e., initial cash flow is negative, and all...
Assume a project has normal (conventional) cash flows (i.e., initial cash flow is negative, and all other cash flows are positive). Which of the following statements is most correct? All else equal, a project's IRR increases as the required rate of return declines. All else equal, a project's IRR increases as the required rate of return increases All else equal, a project's NPV increases as the required rate of return declines. None of the above Question 11 (2 points) Suppose...
Question 10 7.5 pts You are considering a project with conventional cash flows. The IRR is...
Question 10 7.5 pts You are considering a project with conventional cash flows. The IRR is 15.7 percent, NPV is -$198, and the payback period is 3.92 years. Which one of the following statements is correct given this information? This project should be accepted based on the internal rate of return. The discount rate used in computing the net present value was less than 15.7 percent. The required rate of return must be greater than 15.7 percent. The discounted payback...
s. Understanding the NPV profile Aa Aa If an independent project with conventional, or normal, cash flows is being...
s. Understanding the NPV profile Aa Aa If an independent project with conventional, or normal, cash flows is being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree. Projects W and X are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. NPV (Dollars) Year Project W Project x 800 0 - $1,500 -$1,000 $200 $350 600 Project X 2 $350 $500 $400 $600 400 4 $600 $750 Project W 200...
Question P8 (5 Points) A project that will provide annual cash flows of $5,000 a year...
Question P8 (5 Points) A project that will provide annual cash flows of $5,000 a year for five years and costs $18,000 today. Show all work: a) At a required rate of return of 10% what is the Net Present Value (NPV) of the project? b) At a required rate of return of 15% what is the Net Present Value (NPV) of the project? c) At what discount rate would you be indifferent between accepting the project and rejecting the...
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...
If an independent project with conventional, or normal, cash flows is being analyzed, the net present...
If an independent project with conventional, or normal, cash flows is being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree Projects Y and Z are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. NPV (Dollars Year Project Y Project Z 800 -$1,500 -$1,500 0 $200 $900 1 600 Project Y $400 $600 2 $600 $300 400 $1,000 $200 4 Project Z 200 If the weighted average cost of capital...
If an independent project with conventional, or normal, cash flows is being analyzed, the net present...
If an independent project with conventional, or normal, cash flows is being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree. Projects W and X are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. NPV (Dollars) 800 0 -$1,00 Year Project W -$1,000 1 $200 2 $350 $400 $600 Project x -$1,500 $350 $500 $600 $750 Project X Project W If the weighted average cost of capital (WACC) for each...
Please explain the answer. The Mishka's project requires initial investments of $100 and its NPV is...
Please explain the answer.
The Mishka's project requires initial investments of $100 and its NPV is less than zero. If the project has conventional cash flows and discount rate is above zero, and the project life is 5 years then: The NPV of the project may become positive if the discount rate will increase significantly enough. The project never pays back on discounted basis. The IRR of the project will increase if the required rate of return increases. None of...
Question #10 Finance A project has discounted cash flows as follows: -3,000 1,100 If this project...
Question #10 Finance A project has discounted cash flows as follows: -3,000 1,100 If this project is evaluated as an equivalent annual annuity with a 12% required rate of return that will be repeated in perpetuity, what is the NPV of the project? A 657.37 B. 1.122.12 C. 834.16 0. 233.87 E 935.79 Save Answer
If an investment project (with conventional cash flows) has IRR equal to the cost of capital, the NPV for that project is: Positive Negative Zero Unable to determine Question 13 (2 points) The following are measures used by firms when making capital budgeting decisions except: Payback period Internal rate of return P/E ratio 1. Net present value
Assume a project has normal (conventional) cash flows (i.e., initial cash flow is negative, and all other cash flows are positive). Which of the following statements is most correct? All else equal, a project's IRR increases as the required rate of return declines. All else equal, a project's IRR increases as the required rate of return increases All else equal, a project's NPV increases as the required rate of return declines. None of the above Question 11 (2 points) Suppose...
Question 10 7.5 pts You are considering a project with conventional cash flows. The IRR is 15.7 percent, NPV is -$198, and the payback period is 3.92 years. Which one of the following statements is correct given this information? This project should be accepted based on the internal rate of return. The discount rate used in computing the net present value was less than 15.7 percent. The required rate of return must be greater than 15.7 percent. The discounted payback...
s. Understanding the NPV profile Aa Aa If an independent project with conventional, or normal, cash flows is being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree. Projects W and X are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. NPV (Dollars) Year Project W Project x 800 0 - $1,500 -$1,000 $200 $350 600 Project X 2 $350 $500 $400 $600 400 4 $600 $750 Project W 200...
Question P8 (5 Points) A project that will provide annual cash flows of $5,000 a year for five years and costs $18,000 today. Show all work: a) At a required rate of return of 10% what is the Net Present Value (NPV) of the project? b) At a required rate of return of 15% what is the Net Present Value (NPV) of the project? c) At what discount rate would you be indifferent between accepting the project and rejecting the...
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...
If an independent project with conventional, or normal, cash flows is being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree Projects Y and Z are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. NPV (Dollars Year Project Y Project Z 800 -$1,500 -$1,500 0 $200 $900 1 600 Project Y $400 $600 2 $600 $300 400 $1,000 $200 4 Project Z 200 If the weighted average cost of capital...
If an independent project with conventional, or normal, cash flows is being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree. Projects W and X are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. NPV (Dollars) 800 0 -$1,00 Year Project W -$1,000 1 $200 2 $350 $400 $600 Project x -$1,500 $350 $500 $600 $750 Project X Project W If the weighted average cost of capital (WACC) for each...
Please explain the answer.
The Mishka's project requires initial investments of $100 and its NPV is less than zero. If the project has conventional cash flows and discount rate is above zero, and the project life is 5 years then: The NPV of the project may become positive if the discount rate will increase significantly enough. The project never pays back on discounted basis. The IRR of the project will increase if the required rate of return increases. None of...
Question #10 Finance A project has discounted cash flows as follows: -3,000 1,100 If this project is evaluated as an equivalent annual annuity with a 12% required rate of return that will be repeated in perpetuity, what is the NPV of the project? A 657.37 B. 1.122.12 C. 834.16 0. 233.87 E 935.79 Save Answer
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