Exercise (NPV) - 20 mins Project A, B and C have the following cash-flow projections: Year Project B Project C Project A (S) (S) -10,000 -10,000 3.000 1,000 3,000 2,000 3,000 . 4,000 3,000 8,000 0 1 2 3 4 -14,000 8,000 8,000 -3,000 -5,000 Calculate the Payback Period and Net Present Value (NPV) for each of the projects shown. Assume, i-10% a Decide which is the best project. Justify! What is the advantages of IRR over NPV as a measure of profitability?

Exercise (NPV) - 20 mins Project A, B and C have the following cash-flow projections: Year Project B Project C Project A (S) (S) -10,000 -10,000 3.000 1,000 3,000 2,000 3,000 . 4,000 3,000 8,000 0 1 2 3 4 -14,000 8,000 8,000 -3,000 -5,000 Calculate the Payback Period and Net Present Value (NPV) for each of the projects shown. Assume, i-10% a Decide which is the best project. Justify! What is the advantages of IRR over NPV as a measure of profitability?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section: Chapter Questions

Problem 23SP

See similar textbooks

Similar questions

Calculating IRR Compute the internal rate of return for the cash flows of the following two projects: Year Project A Project B 0 -$7,300 -$4,390 1 3, 940 2,170 2 3,450 2,210 3 2,480 1,730
For the cash flows shown, determine: (a) the number of possible i* values (b) the i* value displayed by the IRR function (c) the external rate of return using the MIRR method if ii = 18% per year and ib = 10% per year. Year 0 1 2 3 4 Revenues, $ 0 25,000 19,000 4000 18,000 Costs, $ −6000 −30,000 −7000 −6000 −12,000
What is Project A's Modified Internal Rate of Return with a WACC of 7.75%? YEAR 0 1 2 3 4 CASH FLOWS Project A -$1050 675 650 Project B -$1050 360 360 360 360
=NPV(B26,I27:R27)-B24 B26 = discount rate of 9% B24 = initial investment of $30m I27:R27 = yearly cash flows: what are the cash flows for each year?
Use the following cash flow data to calculate the project's MIRR: WACC: Year Cash flows Select one: a. 9.32% b. 10.35% C. 11.50% d. 12.78% e. 14.20% 10.00% 0 -$1,000 Tax rate: 1 $450 35% 2 $450 3 $450
Calculate the internal rates of return of the following investment: Net investment -$1,100 Year 0 Net cash flows +6,500 Year 1 -11,400 Year 2 +6,000 Year 3 Round your answers to the nearest whole number and enter them in ascending order. IRR1: 0% IRR2: % IRR3: %
Consider the following investment projects.Year (n) Net Cash FlowProject 1 Project 20 -$1,200 -$2,0001 600 1,5002 1,000 1,000IRR 19.65% 17.54%Determine the range of MARR where project 2 would be preferred over project 1.(a) MARR … 12.5%(b) 13% … MARR … 15%(c) 16% … MARR(d) Not enough information to determine
1. Consider the following investment projects: Year(n) Net cash flow Project 1 -$1,200 Project 2 -$2,000 1 600 1,500 2 1,000 1,500 IRR 19.65% 17.53% Determine the range of MARR for which Project 2 would be preferred over Project 1
A project is being analyzed with the following set of cash flows. Calculate the internal rate of return (IRR). (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cash Year Flow 0 16,000 123 6,700 8,000 6,500 IRR %
For the cash flows shown, determine: (a) the number of possible /* values (b) the value displayed by the IRR function (c) the external rate of return using the MIRR method if i;= 18% per year and ib = 10% per year. Year Revenue, $ 0 1 2 3 4 о 25,000 19,000 4,000 28,000 Cost, $ -6,000 -30,000 -7,000 -6,000 -12,000 The number of i* values according to the rule of signs test is (Click to select) ✓ According to the cumulative cash flow sign test, /* value is (Click to select) The IRR function displays i* value as %. The external rate of return according to the MIRR method is %.
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 -24,063 -24,063 1 10,320 12,063 2 10,900 9,360 3 10,800 10,400 Sketch the NPV profiles for X and Y over a range of discount rates from zero to 25 percent (take 0%, 5%, 10%, 15%, 20%, 25%). Calculate the IRR of the projects. What is the relationship between NPV and IRR for your values? What is the crossover rate for these two projects and what it indicates for your values? Note - answer all the parts of the question.
1- Information about the investment project is as follows. Discount rate (r) = 20% Year Net Cash Flows (TL) 0 -10.000.000 one - 6.000.000 2nd - 2,000,000 3 30.000.000 4 40.000.000 a) Calculate the net present value of the investment. Please interpret with the reasons whether the investment project will be accepted or not according to your result. b) Calculate the internal rate of return of the project using the adjusted internal rate of return method. Interpret the result you found. Explain why the adjusted internal rate of return method was used for the solution. Show the equation you created. You can reach the result by using the excel function. c) Calculate the profitability index of the investment and interpret your result