Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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an amount of $15000 of funds from investing activities would mean
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- Project A would cost $44,383.00 today and have the following other expected cash flows: $27,842.00 in 1 year, $18,921.00 in 2 years, $4,722.00 in 3 years, and $3,185.00 in 4 years. The cost of capital for project A is 11.88 percent. Project B would cost $97,631.00 today and have the following other expected cash flows: $55,937.00 in 1 year, $24,612.00 in 2 years, $27,364.00 in 3 years, and $2,415.00 in 4 years. The cost of capital for project B is 7.73 percent Statement 1: Project A would be accepted based on the project's internal rate of return (IRR) and the IRR rule Statement 2: Project B would be accepted based on the project's payback period and the payback rule if the payback threshold is 2.90 years Statement 1 is true and statement 2 is true Statement 1 is true and statement 2 is false Statement 1 is false and statement 2 is true Statement 1 is false and statement 2 is falsearrow_forwardHow to solve a problem when they give you the liability amount $120000 and the equity $232k and they ask to fund the total assets?arrow_forwardGomez is considering a $235,000 Investment with the following net cash flows. Gomez requires a 12% return on its Investments. (PV of $1, FV of $1. PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 $72,000 Year 2 $49,000 Year 3 Year 4 $90,000 $129,000 Year 5 $51,000 (a) Compute the net present value of this Investment. (b) Should Gomez accept the Investment? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of this investment. Note: Round your answers to the nearest whole dollar. Net Cash Year Flows Present Value of 1 at 12% Present Value of Net Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 Totals Initial investment Net present valuearrow_forward
- construct a cash flow diagram to find the return on investment of P60,000 made today and accumulated to an amount of P95,000 in 5 yearsarrow_forwardat the beginning of year one, you have $100,000. Investments A and B are available. Their cash flows are as follows year 1 investment A $-1, investment B $0 Year 2 investment A $.5, investment B $-1. Year three investment A .8 investment B .8. In year 4 investment a .2 investment B .7. Assume that any money not invested in a or B earns interest at an annual rate of 2.5%. Determine how to maximize your cash on hand in your fourarrow_forward
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