Abandonment Value ProblemRequired Return isIN 000's10%NORMALYEAR0CASH FLOW(8,800)ABANDONENTFLOWPROJECTNPV BY YEAR8,80016,000+3,100 =9,100NPV (10,-8800, 9, 1003, {1}N/A-52722,875+3,900 = 4,77531,000+0 = 1,000If the project should be accepted, for how many years should the firm invest?A 1B2C3D do not accept project

Net present value (NPV) is the difference between the present value of cash inflows and the present…

Answered: Abandonment Value Problem Required…

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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x E My Home CengageNOWv2 |Online teachir x+ now.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inpro. ta o 伯 Determine the average rate of return for a project that is estimated to yield total income of $250,000 over 4 years, costs $480,000, and has a $20,000 residual value. Next Previous Submit Test for Grading
n/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSession Locator=&inprogress=false eBook Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value. Project X Project Y $242,311 Initial investment Net cash flows anticipated: Year 1 Year 2 82,000 58,000 93,000 81,000 75,000 A. Compute the IRR for both projects using the IRR spreadsheet function. Project X Project Y B. Which project should be recommended. Year 3 Year 4 Year 5 Project X Feedback Check My Work % 2 % $175,063 C Remember that all amounts need to be used in the formula in Excel. Follow the examples given for using the formula using the Help function in Excel. Compare the two amounts you calculate. Which amount would be better over the other? A 35,000 54,000 72,000 67,000 28,000 A 76 00 Incognito Aa TH 3
The following information is available on two mutually exclusive projects. Project Year 0 Year 1 Year 2 Year 3 Year 4 A -$700 $200 $300 $400 $500 B -$700 $600 $300 $200 $100 If the required rate of return is 10%, which project should be selected using the net present value (NPV) method? Group of answer choices A B
The following information is available on two mutually exclusive projects. Project Year 0 Year 1 Year 2 Year 3 Year 4 A -$700 $200 $300 $400 $500 B -$700 $600 $300 $200 $100 If the required rate of return is 10%, which project should be selected using the internal rate of return (IRR) method? Group of answer choices A B
6) Year Project A Project B Difference 0 -75000 -75000 0 1 26300 24000 2300 2 29500 26900 2600 3 45300 51300 -6000 Crossover rate 14.60% Hi I need help with the following question! Thank you! Are you going to accept project A or project B? Why?
Note: Assume i = 13% Period A B D -2500 -1000 2500 -3000 1 5400 -3000 -7000 1500 5500 6500 14400 1000 2000 7200 3000 4000 A. What is the future worth of the project having the third highest future worth? Select one: o a. P929k o b. P4,000k O .-P1,000k o d. P1,144k Assuming management allows to proceed with the implementation of projects as long as its B. future net worth is more than P10,000k. Which among the following projects will you choose to implement? (Choose as many as applicable).
Year 0 Cash Flow = +$25,000 (assume only 1 change in signs) Project IRR = 4.5% Project DR = 6.0% %3D Should the project be accepted without reviewing NPV? Why or why not? Explain
ch A project with an initial investment of $88000 and a profitability index of 1.239 also has an internal rate of return of 12%. The present value of net cash flows is O $71025. O $98560. O $88000. O $109032. Save for Later O Et V B 21 E 7 Attempts: 0 of 1 used Submit Answer F12
Consider the two projects below. The MARR is 12%. Find the Incremental IRR. n n=0 n=1 n=2 n=3 Project 1 -9000 -6000 -15000 -400 Project 2 -9000 -9000 -10000 |-1565 The Incremental IRR is within 1% of 28% 30% 32% 34% 36% ONone of the above
Consider the following two projects, X and Y: Period Project X Project Y 0 $(100,000) $(120,000) 1 $22,000 $0 2 $22,000 $0 3 $22,000 $0 4 $22,000 $0 5 $45,000 $175,000 Regarding the internal rate of return, which of the following statements is correct? The internal rate of return of Project Y is greater than the internal rate of return of Project X. The internal rate of return of Project X is equal to the internal rate of return of Project Y. O The internal rate of return of Project X is greater than the internal rate of return of Project Y. The internal rate of return of Projects X and Y cannot be determined based on this information.
Clear my choice The total investment required for a project is estimated at OMR100, 000. The cash flows expected from project for the first four years are given below Year Project A Year 1 25,000 Year 2 38,500 Year 3 42,000 Year 4 48,000 What will be pay back period? 2.86 O b. B.23 c. 3.03 d. 2.63 All the options are wrong o search Tenovo 近

The following information is available on two mutually exclusive projects. All numbers are in ‘000s. Project Year 0 Year 1 Year 2 Year 3 Year 4 A $700 $300 $300 $400 $400 B $700 $600 $300 $200 $100 a: If the minimum acceptable rate of return is 10%, which project should be selected using the Net Present Value (NPV) method? Which project should be selected if the Internal Rate of Return (IRR) method is used? b: At what cross‐over rate would the firm be indifferent between the two projects? What is the NPV for both projects at the crossover rate? c: How much should cash flow in year 3 for project B increase or decrease in order for NPV(B) to be equal to NPV(A)?

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