Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A firm evaluates all of its projects by applying the IRR rule. The required return for the following project is 21 percent. The IRR is _____ percent and the firm should ______ the project.
Year Cashflow
0 -$28,643
1 $21,000
2 $16,000
3 $4,000
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- A project has cash flows of -$148,000, $43,000, $87,000, and $44,000 for Years 0 to 3, respectively. The required rate of return is 11 percent. Based on the internal rate of return of the project. percent for this project, you shouldarrow_forwardCalculate the profitability index of a 20-year project with a cost of $400,000 and an annual cash flows of $50,000 in years 1-10 and $25,000 in years 11-20. The company's required rate of return is 10% O a. 0.98 O b. 1.02 O c. 1.15 d. 1.08 Oe. 0.92arrow_forwardAverage Rate of Return The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Amount of investment Useful life Estimated residual value Estimated total income over the useful life Project A Project Z $80,000 $64,000 4 years 9 years 0 0 $6,400 $20,160 Determine the expected average rate of return for each project. Round your answers to one decimal place. Project A Project Z Feedback Check My Work X % X %arrow_forward
- A firm evaluates all of its projects by applying the IRR rule. If the required return is 18 percent, will the firm accept the following project?CF0 = -$30,000CO1 = $20,000C02 = $14,000C03 = $11,000 yes or noarrow_forwardConsider the following projects, X and Y where the firm can only choose one. Project X costs $1500 and has cash flows of $678, $652, $347, $111, $54, $16 in each of the next 6 years. Project Y also costs $1500, and generates cash flows of $738, $693, $405 for the next 3 years, respectively. WACC=11%.Calculate the projects’ NPVs, IRRs, payback periods.arrow_forwardA firm evaluates all of its projects by applying the IRR rule. Year Cash Flow 0 1 2 3 162,000 54,000 85,000 69,000 What is the project's IRR? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return %arrow_forward
- Find internal rate of return of a project with an initial cost of $43,000, expected net cash inflows of $9,550 per year for 8 years, and a cost of capital of 9.35%. Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72. A. 15.64% B. 14.90% C. 13.70% D. 14.75% E. 11.17%arrow_forwardAverage rate of return The following data are accumulated by Patterson Inc. in evaluating two competing capital investment proposals: Amount of investment Useful life Feedback Estimated residual value $6,760 $6,600 Estimated total income over the useful life Determine the expected average rate of return for each project. Round your answers to one decimal place. Project C Project T 4.5 X % Project C Project T $52,000 $24,000 4 years 8 X % years 0 0arrow_forwardNPV Calculate the net present value (NPV) for a 15-year project with an initial investment of $30,000 and a cash inflow of $8,000 per year. Assume that the firm has an opportunity cost of 17%. Comment on the acceptability of the project. The project's net present value is $ (Round to the nearest cent.)arrow_forward
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