An investment project has annual cash inflows of $6,000, $7,100, $7,900 for the next four years, respectively, and $9,200, and a discount rate of 16 percent. What is the discounted payback period for these cash flows if the initial cost is $9,500? (Do not round your intermediate calculations.) Multiple Choice 3.64 years 1.82 years O 2.57 years 0.82 years

An investment project has annual cash inflows of $6,000, $7,100, $7,900 for the next four years, respectively, and $9,200, and a discount rate of 16 percent. What is the discounted payback period for these cash flows if the initial cost is $9,500? (Do not round your intermediate calculations.) Multiple Choice 3.64 years 1.82 years O 2.57 years 0.82 years

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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ems with IRR Suppose you are offered a project with the following cash flows: Year Cash Flows 0 $ 8,900 1 -4,600 2 -3,300 3 -2,400 4 -1,700 a. What is the IRR of this offer? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR % b. If the appropriate discount rate is 11 percent, should you accept this offer? O Reject Accept c. If the appropriate discount rate is 23 Sercent, should you accept this offer? 3 Percent, should you accept this offer? O Accept O Reject d-1. What is the NPV of the offer if the appropriate discount rate is 11 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d-2. What is the NPV of the offer if the appropriate discount rate is 23 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 4 5 Cash flow: $1,600 $590 $660 $640 $420 $220 Payback years Should the project be accepted or rejected? O accepted O rejected MacBook Air
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$ -$ 0 1235 4 NO a- Whichever project you choose, if any, you require a return of 14 percent on your investment. Project A Project B 357,000 38,000 58,000 58,000 433,000 a-1. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) 46,500 23,300 21,300 18,800 13,900 Project A Project B Payback period If you apply the payback criterion, which investment will you choose? 2. O Project A O Project B years years b- What is the discounted payback period for each project? (Do not round intermediate 1. calculations and round your answers to 2 decimal places, e.g., 32.16.) Discounted payback period years years
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Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$1,100 $390 $510 $540 $320 $120 Should the project be accepted or rejected?multiple choice accepted rejected
1. A project that provides annual cash flows of $1,200 for nine years costs $6,000 today. Is this a good project if the required return is 8 percent? What if it's 24 percent? At what discount rate would you be indifferent between accepting the project and rejecting it? The graph displays the project's NPV profile NPV 1 0 -1 0.1 0.2 NPV Profile 0.3 0.4 Interest Rate
You are considering two mutually exclusive projects with the following cash flows. Which project(s) should you accept if the discount rate is 7 percent? What if the discount rate is 10 percent? YEAR PROJECT A PROJECT B 0 -$275,000 -$202,000 1 0 113,600 2 0 81,900 3 360,000 47,000
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Consider the following two mutually exclusive projects: YEAR CASH FLOW (A) CASH FLOW (B)0 -$300,000 -$39,0001 20,000 18,0002 70,000 12,0003 80,000 18,0004 400,000 19,000 Whichever project you choose, if any, you require a 15 percent return on your investment.i) If you apply the payback period (PBP) criterion, which investment will you choose? Why?ii) If you apply the net present value (NPV) criterion, which investment will you choose? Why?iii) If you apply the profitability index (PI) criterion, which investment will you choose? Why?iv) If you apply the internal rate of return (IRR) criterion, which investment will you choose?Why?v) Based on your answers in (i) through (iv), which project will you finally…

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