Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Which alternative should be selected using incremental rate of return analysis, if MARR = 12.0%? First cost Annual benefit Life ROR Do-nothing 0 10 yrs A B $6,500 $3,500 1,246 765 с D $7,500 $5,000 1,523 779 14.0% 17.5% 15.5% 9.0% B, because its ROR is the highest something other than C, because C costs the most initially C because C has the highest annual benefit C, because the C-B increment has a ROR of 13.70% and the A-B increment has a ROR of 9.66%arrow_forward(Present value of an uneven stream of payments) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: Investment B A $ 1,000 2,000 3,000 (4,000) 1,000 4,000 3,000 (Click on the icon in order to copy its contents into a spreadsheet.) What is the present value of each of these three investments if the appropriate discount rate is 9 percent? $ End of Year 1 SA NM CO 2 3 4 5 $ 1,000 1,000 1,000 C $ 5,000 a. What is the present value of investment A at an annual discount rate of 9 percent? (Round to the nearest cent.) b. What is the present value of investment B at an annual discount rate of 9 percent? (Round to the nearest cent.) c. What is the present value of investment C at an annual discount rate of 9 percent? (Round to the nearest cent.) 5,000 (5,000) (5,000) 15.000arrow_forwardA. 6.36 The four alternatives described below are being evaluated. This question has three parts Part 2: If the proposals are mutually exclusive, which one should be selected at a MARR of 14.5% per year? Incremental Rate of Return, %, When Compared with Alternative Overall Initial Alternative Rate of A Investment, $ Return, % -60,000 11.7 -90,000 22.2 43.3 C -140,000 17.9 22.5 10.0 D -190,000 15.8 17.8 10.0 10.0 O B O A O C ODarrow_forward
- An investment earns 7% the first year, earns 12% the second year, and loses 10% the third year. The geometric average return over the three years was ________ Select one: a. 9.65% b. 2.55% c. 3% d. 3.59% e. 9.67%arrow_forward1 & 2 are correct. I need help on 3. Please I need fast without plagiarismarrow_forwardGiven the financial data for four mutually exclusive alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =10%.arrow_forward
- Consider the following four alternatives. Three are do-something and one is Do -Nothing. Alternative A B D Cost $O $50 $30 $40 Net annual benefit Useful life (years) Which is the preferred alternative? If 10% interest rate is selected. Use PW analysis. $O $14 $5 $7 5 10 10arrow_forwardCalculate the result of NPV for project A with discount rate = 10%, the best solution is: Year 0 123 + 4 Select one: a. 95.5 b. 127.3 O b. O C. c. -181.8 O d. d. -136.4 A -800 100 200 300 200 B -200 50 70 80 240arrow_forwardAn investment that requires $3000 initial investment will return $1000 at the end of first year, $2000 at the end of second year, and $3000 at the end of third year. Assume the discount rate is continuously compounded at 10%.What is the Net Present Value of the investmentarrow_forward
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