A Ltd. is considering a Project having a life of 5 year with following cash flowsProject I30,000OutflowInflowT-1T-28,0009,000T-3T-4T-59,0007,0005,000P.V. TableYear10%90920269309%35%6741.833.7947962..826.694.630500592751.683549406301579455482397350.621402315269223Calculate IRR of the above project.

IRR is the rate of return a project generates through its lifetime expressed in annual terms. It is…

Answered: A Ltd. is considering a Project having…

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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Crenshaw Enterprises has gathered projected cash flows for two projects. Year Project Project J 0 1234 -$260,000-$260,000 114,000 105,000 89,000 78,000 91,000 100,000 a. Interest rate b. 102,000 109,000 a. At what interest rate would the company be indifferent between the two projects? (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? do %
An investment project provides cash inflows of $740 per year for 9 years. What is the project payback period if the initial cost is $1,480? A. 2.00 years B. 2.02 years C. 1.90 years D. 1.94 years E. 2.04 years What is the project payback period if the initial cost is $4,958? A. 6.70 years B. 6.77 years C. 6.37 years D. 6.83 years E. 6.50 years What is the project payback period if the initial cost is $7,400? A. 3.01 years B. Never C. 4.95 years D. 5.25 years E. 1.35 years
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A company is considering a project with a cost of $248,000. The cash flows for the project are provided in the table below. If the required return for the project is 14.2%, what is the project's NPV? Year CF 1 $68,500 2 $72,800 3 $75,300 4 $81,400 5 $78,200 $81,422 $128,200 $6,481 $222,838 $254,481
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Below is information about cash flow of Project A undertaken by ZEE Limited. Required rate of return for such type of project is 15%. Years 0 1 2 3 4 5 Cash Flow in Rs. (500,000) 150,000 200,000 170,000 190,000 250,000 Calculate payback period and Net present value (NPV).
Your division is considering two projects with the following cash flows (in millions): Year 1 3 $5 $17 $10 $6 5% Project A -$25 Project B -$20 a. What are the projects' NPVs assuming that the WACC is 5%, 10%, and 15%? WACC NPV-A NPV-B WACC 10% 0 15% 2 NPV-A $10 $9 NPV-B b. What are the projects' IRRs? c. If the WACC was 10%, ad A and B were mutually exclusive projects, which project would you choose?
Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 30,000 012345 12,200 14,900 16,800 13,900 -10,400 The company uses an interest rate of 8 percent on all of its projects. Calculate the MIRR of the project. (Do not round intermediate calculation your answer as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR %
What is Project A's Modified Internal Rate of Return with a WACC of 7.75%? YEAR 0 1 2 3 4 CASH FLOWS Project A -$1050 675 650 Project B -$1050 360 360 360 360
The investment required for a project is estimated at OMR 50,000. The cash flows expected from the project are: Year 1 OMR 22,000, Year 2 OMR 24,000 and Year 3 OMR 18,000. In this case, the Payback period of the project is: O a. None of these O b. 1.76 yedars O c. 2.22 years o d. 2.34 years
Here are the expected cash flows for three projects: Cash Flows (dollars) Year 2 Project A C Year 8 -6,588 -2,580 -6,500 Year 1 +1,375 +1,375 +2,588 +1,375 +1,375 Year 3 +3,758 +2,758 +3,750 Year 4 8 +3,750 +5,758 a. What is the payback period on each of the projects? b. If you use the payback rule with a cutoff period of 2 years, which projects will you accept? c. If you use a cutoff period of 3 years, which projects will you accept? d-1. If the opportunity cost of capital is 12%, calculate the NPV for projects A, B, and C. Note: Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. d-2. Which projects have positive NPVs? e. "Payback gives too much weight to cash flows that occur after the cutoff date." True or false? a. Payback period b. If you use the payback rule with a cutoff period of 2 years, which projects will you accept? c. If you use a cutoff period of 3 years, which projects will you accept?…

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