eases 3 years Create a table with: interest ranging from 0% o 50% increasing by 5% increments NPV for each of these %. Use NPV function. Tip: do not include the cost of machine in the function; add that amount to NPV. - Plot the NPV's for all %s. - What is the IRR(s)? Not only graphically, but solve for IRR(s) using Goal Seek for the problem. Cashflow: Year

eases 3 years Create a table with: interest ranging from 0% o 50% increasing by 5% increments NPV for each of these %. Use NPV function. Tip: do not include the cost of machine in the function; add that amount to NPV. - Plot the NPV's for all %s. - What is the IRR(s)? Not only graphically, but solve for IRR(s) using Goal Seek for the problem. Cashflow: Year

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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1. If the interest rate is 8% per year, what decision would you make based on the decision tree diagram in Figure below. (0.6) Introduce New Product $200,000 profit per year for six years, starting at ΕΟΥ 3 -$1,000,000 at ΕΟ 2 (0.4) $280,000 profit per year for six years, starting at ΕΟΥ 3 Year 0 $0 profit/yr. for 8 years Figure 10.3. Decision Tree Diagram Do Nothing
A machine has 20 years of life. The income 15000 for the first year decrease by 250 each year (Uniform Gradient). Find the present worth for these payments for 40 years life using an interest rate of 5% per %D .year
1. If the interest rate is 8% per year, what decision would you make based on the decision tree diagram in Figure below. (0.6) Introduce New Product $200,000 profit per year for six years, starting at EOY 3 -$1,000,000 at ΕΟΥ 2 (0.4) $280,000 profit per year for six years, starting at ΕΟΥ Year 0 $0 profit/yr. for 8 years Do Nothing
Mike Derr Company expects to earn 6% per year on an investment that will pay $616,000 seven years from now. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Compute the present value of this investment. Future Value Table Factor Present Value
Which alternative in the table below should be selected when the MARR = 4% per year? The life of each alternative is 10 years. Increment Considered A(B-A) A Investment cost $500 $124 A (Annual Revenues less Costs) IRR on A Investment Cost The IRR on A(C-B) is 6.6 %. (Round to one decimal place.) The IRR on A(D-C) is %. (Round to one decimal place.) A(A-DN) $900 $157 11.6% C 21.2% A(C-B) $1,200 $168 ? A(D-C) $1,700 $170 ? D
Which alternative in the table below should be selected when the MARR = 9% per year? The life of each alternative is 10 years. Increment Considered A(A – DN) A(B- A) A(C - B) A(D - C) A Investment cost A (Annual Revenues less Costs) $900 $600 $1,000 $1,600 $160 $147 $130 $161 IRR on A Investment Cost 10.1% 17.3% ? ..... The IRR on A(C-B) is %. (Round to one decimal place.)
Find the NPV: Financial Calculator: Investment that pays $4,880 at the end of each of the next 3 years. Initial cost of $1,220 and a cost at the end of the 2nd year of $6,100. Interest rate is 1.7%. My numbers in the FC are: N: 3 I/Y: 1.7% PV: CPT; Initial Investment cost of -7,320 PMT: 4,880 each year (3x) CF1/CF2/CF3 FV: 0 My benefit was $14,155.99 - my cost of $7,320.00 = $6,835.99. My answer is incorrect. What am i doing wrong?
Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $15,400 and will produce cash flows as follows: End ofYear Investment A B 1 $ 8,400 $ 0 2 8,400 0 3 8,400 25,200 The present value factors of $1 each year at 15% are: 1 0.8696 2 0.7561 3 0.6575 The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment B is:
1. You are promised an 8-year streams of income from buying a new technology at the initial amount of P 40,000.00. If the income increases by 3%, 4%, 5% and 6% respectively from the 2nd to 5th year then return to initial amount from the 6th to the 8th year, what is the present value of stream of income if the current interest prevailing is 6.5%? 2. You bought a new machine worth P 345,000.00. Research on this machine showed that it will reduce cost of production in the following sequence: Year 1 = P 22,500; Year 2 = P27,300; Year 3 = 30,500.00; Year 4 = 32,450 and Year 5 = 29,600. If the current interest rate is 7.2%. Should the machine be bought?
Mike Derr Company expects to earn 8% per year on an investment that will pay $616,000 ten years from now. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Compute the present value of this investment. Future Value 616,000 X Table Factor Present Value
Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $14,700 and will produce cash flows as follows: End ofYear Investment A B 1 $ 9,300 $ 0 2 9,300 0 3 9,300 27,900 The present value factors of $1 each year at 15% are: 1 0.8696 2 0.7561 3 0.6575 The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment B is: Multiple Choice $(18,344). $8,679. $3,644. $46,244. $13,200
A company buys a printing machine for 21,000. It is expected for that machine to generate 3000 dollars in the first year, 5000 dollars in the second year, and 15000, in the third year. What is the NVP for the project if the interest rate is 10.5% compounded semi-annually? A. $ + 770.56 B. $ + 460.32 C. $ -770.56 D. $ - 460.32

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