Consider an investment project that has an internal rate of return of 9%, requires an initial investment in moment zero of £ 55000 and has the expected stream ofcash flows (CF) for the next three years as follows:The expected cash flow for year 2 is:£23998lita_mastO b. It is not possible to compute with given informationOC. £ 28474Clear my choiceEquity beta differs from Asset beta:Year123master Lor11000?32000O a. Because the existence of debt implies the consideration of the respective tax shield which benefits the equity holder.Ob.Because the equity holder exposure to systemic risk is the riskiest among all stakeholders, independently of financing decisions.Because in case of existing debt, the equity holder exposure to the systemic risk is the highest among all stakeholders.

Initial investment = 55,000IRR = 9%At IRR the NPV of the company is zero.So, when discounted using…

Consider an investment project that has an internal rate of return of 9%, requires an initial investment in moment zero of £ 55000 and has the expected stream of cash flows (CF) for the next three years as follows: The expected cash flow for year 2 is: £23998 lita_mast a. O b. It is not possible to compute with given information OC. £ 28474 Clear my choice Equity beta differs from Asset beta: Year master Lo 2 3 O a. Because the existence of debt implies the consideration of the respective tax shield which benefits the equity holder. O b. Because the equity holder exposure to systemic risk is the riskiest among all stakeholders, independently of financing decisions. Because in case of existing debt, the equity holder exposure to the systemic risk is the highest among all stakeholders.

Consider an investment project that has an internal rate of return of 9%, requires an initial investment in moment zero of £ 55000 and has the expected stream of cash flows (CF) for the next three years as follows: The expected cash flow for year 2 is: £23998 lita_mast a. O b. It is not possible to compute with given information OC. £ 28474 Clear my choice Equity beta differs from Asset beta: Year master Lo 2 3 O a. Because the existence of debt implies the consideration of the respective tax shield which benefits the equity holder. O b. Because the equity holder exposure to systemic risk is the riskiest among all stakeholders, independently of financing decisions. Because in case of existing debt, the equity holder exposure to the systemic risk is the highest among all stakeholders.

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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6.Calculate the project's Modified Internal Rate of Return (MIRR). What critical assumption does the MIRR make that differentiates it from the IRR? TIP : look for the definition of Modified Internal Rate of Return, and then do it in excel, easy !!! Year Net Cash flow Future Value of Net Cash flow 0 -$20.8 example 1 $4.5 $7.97 (n=6, i=10%)=fv(.1,6,,4.5) 2 $6.3 (n=5, i=10%) 3 $5.2 (n=4, i=10%) 4 $3.9 (n=3, i=10%) 5 $2.1 (n=2, i=10%) 6 $1.3 (n=1, i=10%) 7 $0.5 (n=0, i=10%) Sum = $XX.XX MIRR = ( in excel ) Rate ( 7,-20.8, xx.xx) 7.Where does the value of MIRR fall relative to the discount rate and IRR?
Consider an investment where the cash flows are: – $946.21 at time t = 0 (negative since this is your initial investment) $377 at time t = 1 in years $204 at time t = 2 in years $499 at time t = 3 in years (a) Use Excel's "Solver" to find the internal rate of return (IRR) of this investment. Take a screen shot showing Solver open with your entries for the function clearly visible. Paste the screen shot into an application (like Paint), and save it as a (.png) file. Upload your screenshot below. (b) What is the value of IRR found by Solver?
Consider the investment project with net cash flows shown. There are 2 rates of return for the project. One is 43.47%. What is the other? Enter as a percentage without the percent sign. For instance, if your answer is 10.23%, enter as 10.23. n Net Cash Flow 0 -$8000 1 $10000 2 $30000 3 -$40000
You identify an investment project with the following cash flows. If the discount rate is 10%, what is the present value of these cash flows? Y1- $500 Y2- $550 Y3- $800 Y4- $450. Please type answer no write by hend.
Consider the following cash flow profile, and assume MARR is 11 percent/year. ΕΟΥ NCF $-115 1 $19 $19 3 $19 4 $19 5 $19 $19 a. What does Descartes' rule of signs tell you about the IRR(s) of the project? b. What does Norstrom's criterion tell us about the IRR(s) of this project? c. What is the IRR(s) for this project?
Problem #2: Consider an investment where the cash flows are: - $920.33 at time 1 = 0 (negative since this is your initial investment) S407 at time = 1 in years $222 at time = 2 in years $426 at time = 3 in years (a) Use Excel's "Solver" to find the internal rate of return (IRR) of this investment. Take a screen shot showing Solver open with your entries for the function clearly visible. Paste the screen shot into an application (like Paint), and save it as a (.png) file. Upload your screenshot below. (b) What is the value of IRR found by Solver?
A potential project provides the following: Initial Investment = 36,101 Annual cash Flows = 12,101 period= 5 years What is the discount rate If NPV = 0? Answer in the format: #0.00 Answer as a percentage but without the % sign Example 0 0651 is entered as 6.51 Do not round intermediary calculations. Use full precision of your calculator or Excel. Do not include commas or dollar signs. Round properly to two decimal places Example: .157835 would be .16 Example: 2.3491 would be entered 2.35 HINT: Be sure your answer is percentage
you have mistake in calculation please check and advise Present value FACTOR =1-(1.11)^-7/0.11 Present value FACTOR =4.7121962646 how you get this answer submitted Question was An investment under consideration has a payback of seven years and a cost of $685,000. Assume the cash flows are conventional. If the required return is 11 percent, what is the worst-case NPV? What is the best case NPV?
Acme Oscillators is considering an investment project that has the following rather unusual cash flow pattern. Year Cash Flow 0 yr $101 1yr -461 2yr 789 3yr -602.2 4yr 171.6 a. Calculate the project's NPV at each of the following discount rates: 0 %, 5 %, 10 %, 20 %, 30 % , 40 %, 50 %. b. What do the calculations tell you about this project's IRR? The IRR rule tells managers to invest if a project's IRR is greater than the cost of capital. If Acme Oscillators' cost of capital is 8 %, should the company accept or reject this investment? c. Notice that this project's greatest NPVs come at very high discount rates. Can you provide an intuitive explanation for that pattern?
What is the internal rate of return of an investment that requires a 10 percent minimum rate of return and has the following projected cash flows: Yr0 = -100, Yr1 = 25, Yr2 = 35, Yr3 = 45, Yr4 = 35, and Yr5 = 30? a. 19.33 percent b. 21.35 percent c. 20.05 percent d. 22.24 percent
Which of the following comes closest to the net present value (NPV) of a project whose initial investment is $5 and which produces two cash flows: the first at the end of year 2 of $3 and the second at the end of year 4 of $7? The required rate of return is 13%? Select one: a. $1.84 b. $0 c. $1.64 d. $2.05 e. $2.26
5. LL Consider the following cash flows of a project: Year Year 1. 50 0. 2. 3. 4. 1. Find the internal rate of return for this investment. 0. 20. Multiple Choice < Prev 10 of 15 Next here to search F11 F12 F4 F5 69 81 9F-

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