Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
100%
Consider two mutually exclusive new product launch projects that Nagano Golf is
considering. Assume the discount rate for both products is 13 percent.
Project
A:
Project
B:
Nagano NP-30.
Professional clubs that will take an initial investment of $710,000 at Year 0.
For each of the next 5 years, (Years 1-5), sales will generate a consistent cash
flow of $310,000 per year.
Introduction of new product at Year 6 will terminate further cash flows from this
project.
Nagano NX-20.
High-end amateur clubs that will take an initial investment of $880,000 at Year
O.
Cash flow at Year 1 is $260,000. In each subsequent year, cash flow will grow at
10 percent per year.
Introduction of new product at Year 6 will terminate further cash flows from this
project.
Year
0
1
2
3
4
5
NP-30
NX-20
-$710,000 -$ 880,000
260,000
*
310,000
310,000
310,000
310,000
310,000
Complete the following table: (Do not round intermediate calculations. Round your "PI"
answers to 3 decimal places, e.g., 32.161, and other answers to 2 decimal places, e.g.,
32.16. Enter your IRR answers as a percent.)
14
NP-30
286,000
314,600
346,060
380,666
10
fs
NX-20
O Search
16
40
LO
f7
< Prey
8 of 8
H
hp
www
www
a
KAA
Next
S
fo
expand button
Transcribed Image Text:Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both products is 13 percent. Project A: Project B: Nagano NP-30. Professional clubs that will take an initial investment of $710,000 at Year 0. For each of the next 5 years, (Years 1-5), sales will generate a consistent cash flow of $310,000 per year. Introduction of new product at Year 6 will terminate further cash flows from this project. Nagano NX-20. High-end amateur clubs that will take an initial investment of $880,000 at Year O. Cash flow at Year 1 is $260,000. In each subsequent year, cash flow will grow at 10 percent per year. Introduction of new product at Year 6 will terminate further cash flows from this project. Year 0 1 2 3 4 5 NP-30 NX-20 -$710,000 -$ 880,000 260,000 * 310,000 310,000 310,000 310,000 310,000 Complete the following table: (Do not round intermediate calculations. Round your "PI" answers to 3 decimal places, e.g., 32.161, and other answers to 2 decimal places, e.g., 32.16. Enter your IRR answers as a percent.) 14 NP-30 286,000 314,600 346,060 380,666 10 fs NX-20 O Search 16 40 LO f7 < Prey 8 of 8 H hp www www a KAA Next S fo
Project
B:
Year
0
1
2
3
4
5
Nagano NX-20.
High-end amateur clubs that will take an initial investment of $880,000 at Year
0.
Cash flow at Year 1 is $260,000. In each subsequent year, cash flow will grow at
10 percent per year.
Introduction of new product at Year 6 will terminate further cash flows from this
project.
Payback
IRR
PI
NPV
#
3
NP-30
-$710,000-$880,000
310,000
310,000
310,000
310,000
310,000
Complete the following table: (Do not round intermediate calculations. Round your "PI"
answers to 3 decimal places, e.g., 32.161, and other answers to 2 decimal places, e.g.,
32.16. Enter your IRR answers as a percent.)
$
14
NP-30
4
10
NX-20
fs
%
260,000
286,000
314,600
346,060
380,666
years.
%
5
WEN
NX-20
O Search
16
40
6
years
%
LO
&
< Prev
7
#
8 of 8
8
no
www
www
www
0
☆
Next
ho
▶
M
A
e
6:12
Po F.
W
expand button
Transcribed Image Text:Project B: Year 0 1 2 3 4 5 Nagano NX-20. High-end amateur clubs that will take an initial investment of $880,000 at Year 0. Cash flow at Year 1 is $260,000. In each subsequent year, cash flow will grow at 10 percent per year. Introduction of new product at Year 6 will terminate further cash flows from this project. Payback IRR PI NPV # 3 NP-30 -$710,000-$880,000 310,000 310,000 310,000 310,000 310,000 Complete the following table: (Do not round intermediate calculations. Round your "PI" answers to 3 decimal places, e.g., 32.161, and other answers to 2 decimal places, e.g., 32.16. Enter your IRR answers as a percent.) $ 14 NP-30 4 10 NX-20 fs % 260,000 286,000 314,600 346,060 380,666 years. % 5 WEN NX-20 O Search 16 40 6 years % LO & < Prev 7 # 8 of 8 8 no www www www 0 ☆ Next ho ▶ M A e 6:12 Po F. W
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