Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Project A requires an investment of 40,000 at time 0. The investment pays 15,000 at time 1 and 40,000 at time 2. Project B requires an investment of X at time 2. The investment pays 20,000 at time 0 and 30,000 at time 1. (a) Provide the expression for the NPV of Project A. (b) Provide the expression for the NPV of Project B. (c) At an effective interest rate of 10%, the NPVS of the two projects are equal. Calculate X.arrow_forwardA 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 project balance profiles for proposed investment projects. Statement 1-For Project A, the cash now at the end of year 2 is $100.Statement 2-For Project C, its net future worth at the end of year 2 is $150.Statement 3-For Project B, the interest rate used is 25%.Statement 4-For Project A, the rate of return should be greater than 15%.Which of the statement(s) above is (are) correct?(a) Just Statements 1 and 2(b) Just Statements 2 and 3(c) Just Statements 1 and 3( d) Just Statements 2, 3, and 4arrow_forward
- What is the discounted payback of a project that has an initial outlay of $20,000 and will generate $6,000 in year 1, $12,000 in year 2, $9,000 in year 3, and $14,000 in year 4 assuming the cost of capital is 10%?arrow_forwardIf the available stable funding is 25M and the net stable funding ratio is at 15%, what could have been the required amount for stable funding?arrow_forwardCalculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%. Time Cash Flow 0 - $53,000 1 $ 21,000 2 $ 21,000 3 $ 21,000 NPV = Payback = Discounted Payback =arrow_forward
- Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%. Time Cash Flow 0 - $63,000 $ 21,000 $ 21,000 $ 21,000 $ 21,000 Payback = Discounted Payback =arrow_forwardA firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 -$ 27,000 1 23,000 14,000 8,000 a. At a required return of 25 percent, what is the NPV for this project? 2 WN 3 NPV b. At a required return of 34 percent, what is the NPV for this project? NPVarrow_forwardmay i know the asnwer??arrow_forward
- Bloombish Corp. Inc. is considering a project that has cash flows of -$152,000, $60,800, $61,300, and $75,000 for Years 0 to 3 respectively. The required rate of return is 14 percent. Based on the internal rate of return ________ percent, you should ___________ the project. Select one: A. 12.95 percent; accept B. 14.67 percent; accept C. 13.67 percent; reject D. 14.67 percent; rejectarrow_forward(c) Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%.) Annual rate of return Project Bono % Project Edge % Project Clayton %arrow_forwardFind the Annual Equivalent Worth AEW for the indefinite project described by (jo» ND-), G, Nc-l»? Assume a MARR of 12% for the project. For the defender, the AEC are described below on the left side. For the challenger, the AEC are described on the right side. 5400 N=1 5100 5350 N=2 4900 5200 N=3 4800 5300 N=4 5300 5500 N=5 5900arrow_forward
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