Fox Co. has identified an investment project with the following cash flows.YearCash Flow$ 97076011,4301,790a. If the discount rate is 9 percent, what is the present value of these cash flows? (Donot round intermediate calculations and round your answer to 2 decimal places,e.g., 32.16.)b. What is the present value at 17 percent? (Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)c. What is the present value at 23 percent? (Do not round intermediate calculationsand round your answer to 2 decimal places, e.g., 32.16.)a. Present value at 9 percentb. Present value at 17 percentc. Present value at 23 percent-234

Present Value Present value refers to the discounted value of cash flows which is occurring at a…

Answered: Fox Co. has identified an investment…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider the following project: Period Net cash flow 0 -100 1 0 2 78.55 3 78.55 The internal rate of return is 20%. The NPV, assuming a 20% opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) 1 Period 2 3 Change in value (economic depreciation) (20.00) 54.55 65.46 Expected economic income
N2. Account
ed Duo Corporation Year 012345 is evaluating a project with the following cash flows: Cash Flow -$28,800 11.000 13,700 15.600 12.700 -9,200 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % % 4
Crenshaw Enterprises has gathered projected cash flows for two projects. s Year Project I Project J 07234 -$ 254,000 -$ 254,000 1 114,600 87,400 103,800 99,400 101,400 108,400 87,800 76,800 a. At what interest rate would the company be indifferent between the two projects? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Which project is better if the required return is above this interest rate?
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 28,300 012345 10,500 13,200 15,100 12,200 -8,700 The company uses an interest rate of 9 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %
For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash Flow 0 –$ 148,000 1 64,000 2 75,000 3 59,000 a. At a required return of 12 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At a required return of 21 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Radhubhai
Solve Part B of the question
3
Manshuk
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 -$ 28,400 1 10,600 2345 13,300 15,200 S 12,300 -8,800 The company uses an interest rate of 8 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %
Consider the following project: Period 0 1 2 3 Net cash flow −275 0 96.55 327.48 The internal rate of return is 17%. The NPV, assuming a 17% opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

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