Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Help me asap plese correct will rateuarrow_forwardBraun Industries is considering an investment project that has the following cash flows: Year 0 1 2 3 Project Cash Flows -$634 $374 $309 $327 The company's WACC is 13.3 percent. What is the project's payback, internal rate of return (IRR), and net present value (NPV)? Should this project be accepted? O 1.54 years; 31.31% ; $191.64; No O 1.84 years; 28.31% ; $161.64; Yes O 1.64 years; 30.31% ; $181.64; Yes O 1.74 years; 29.31% ; $171.64; Yes O 1.54 years; 31.31% ; $191.64; Yesarrow_forward7. The NPV and payback period What information does the payback period provide? Suppose Praxis Corporation's CFO is evaluating a project with the following cash inflows. She does not know the project's initial cost; however, she does know that the project's regular payback period is 2.5 years. Year Year 1 Year 2 Year 3 Year 4 Cash Flow $350,000 $450,000 $475,000 $400,000 If the project's weighted average cost of capital (WACC) is 7%, what is its NPV? $300,440 $394,328 $413,105 $375,550 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. The discounted payback period is calculated using net income instead of cash flows. The discounted payback period does not take the project's entire life into account. The discounted payback period does not take the time value of money into account.arrow_forward
- Compute the NPV for Project M if the appropriate cost of capital is 7 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project M Time: 0 1 2 3 4 5 Cash flow: −$1,400 $430 $560 $600 $680 $180 Should the project be accepted or rejected?multiple choice accepted rejectedarrow_forwardP HI Compute the payback statistic for Project B If the approprlate cost of capital Is 11 percent and the maximum allowable payback perlod Is three years. (If the project never pays back, then enter a "0" (zero).) Project B Time: Cash flow: 3. $4,320 $1,660 -$11,700 $3,420 05 $1,140 Payback years Should the project be accepted or rejected? O accepted O rejected Mail Set flac e here to search 38 直0 DO F4 F5 F7 F8 F11 F12 PrtScr Insert 2$ 4 V 23 5. 9. 8. R. G K.arrow_forward7. The NPV and payback period What information does the payback period provide? Suppose Extensive Enterprises's CFO is evaluating a project with the following cash inflows. She does not know the project's initial cost; however, she does know that the project's regular payback period is 2.5 years. Year Year 1 Year 2 Year 3 Year 4 Cash Flow $275,000 $475,000 $500,000 $400,000 If the project's weighted average cost of capital (WACC) is 10%, what is its NPV? $291,425 O $276,854 O $233,140 O $335,139 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. The discounted payback period is calculated using net income instead of cash flows. The discounted payback period does not take the time value of money into account. The discounted payback period does not take the project's entire life into account.arrow_forward
- Compute the IRR statistic for Project E. The appropriate cost of capital is 8 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project E Time: 0 1 2 3 4 5 Cash flow −$1,900 $710 $750 $700 $480 $280 Should the project be accepted or rejected?multiple choice accepted rejectedarrow_forwardA new project will have an intial cost of $10,000. Cash flows from the project are expected to be $3,000, $3,500, and $4,000 over the next 3 years, respectively. Assuming a discount rate of 8%, what is the project's discounted payback period? Question 4 options: 2.23 2.89 2.75 2.10 It does not pay back on a discounted basisarrow_forwardCompute the NPV for Project M if the appropriate cost of capital is 9 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project M Time: 0 1 2 3 4 5 Cash flow: −$3,500 $750 $880 $920 $1,000 $500 Should the project be accepted or rejected?multiple choice rejected acceptedarrow_forward
- I need help solving this problemarrow_forwardThe NPV and payback period What information does the payback period provide? Suppose ABC Telecom Inc.’s CFO is evaluating a project with the following cash inflows. She does not know the project’s initial cost; however, she does know that the project’s regular payback period is 2.5 years. Year Cash Flow Year 1 $350,000 Year 2 $500,000 Year 3 $500,000 Year 4 $400,000 If the project’s weighted average cost of capital (WACC) is 10%, what is its NPV? $280,268 $224,214 $252,241 $322,308 Which of the following statements indicate a disadvantage of using the discounted payback period for capital budgeting decisions? Check all that apply. The discounted payback period does not take the project’s entire life into account. The discounted payback period is calculated using net income instead of cash flows. The discounted payback period does not take the time value of money into account.arrow_forwardPlease do not give solution in image format thankuarrow_forward
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