Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Question content area top
Part 1
(IRR
calculation)
Determine the IRR on the following projects:a. An initial outlay of $13,000 resulting in a single free cash flow of $17,165 after 9 years
b. An initial outlay of $13,000 resulting in a single free cash flow of $46,394 after 15 years
c. An initial outlay of $13,000 resulting in a single free cash flow of $105,001after 25 years
d. An initial outlay of $13,000 resulting in a single free cash flow of $13,653 after 4 years
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 2 steps with 1 images
Knowledge Booster
Similar questions
- Given the data in the following table, what is the IRR of Project B?arrow_forwardPayback period. Given the cash flow of two projects—A and B—and using the payback period decision model, which project(s) do you accept and which project(s) do you reject if you have a three-year cutoff period for recapturing the initial cash outflow? For payback period calculations, assume that the cash flow is equally distributed over the year. Cash Flow A B Cost $14,000 $110,000 Cash flow year 1 $5,600 $44,000 Cash flow year 2 $5,600 $33,000 Cash flow year 3 $5,600 $22,000 Cash flow year 4 $5,600 $11,000 Cash flow year 5 $5,600 $0 Cash flow year 6 $5,600 $0arrow_forward1arrow_forward
- Calculate the IRR of a project requiring an investment outlay of $ 10,000 resulting in cash inflows of $2,000 at the end of Year 1, $5,000 at the end of Year 2, and $8,000 at the end of year 3. a. 19.79% b. 18.79% c. 20.79% d. 22.79%arrow_forwardA2arrow_forwardCash Payback Period A project has estimated annual net cash flows of $30,000. It is estimated to cost $192,000. Determine the cash payback period. If required, round your answer to one decimal place.fill in the blank 1 yearsarrow_forward
- What is the minimum cash flow that could be received at the end of year 3 to make the following project "acceptable"? Initial cost = $100,000; cash flows at end of years 1 and 2 = $35,000; opportunity cost of capital = 8% a) $39,256.2 b) $47,347.2 c) $29,494.5 d) $37,250.5arrow_forwardCash Payback Period A project has estimated annual net cash flows of $49,500. It is estimated to cost $198,000. Determine the cash payback period. If required, round your answer to one decimal place. ? Yearsarrow_forwardCash Payback Period A project has estimated annual net cash flows of $39,500. It is estimated to cost $158,000. Determine the cash payback period. Round your answer to one decimal place.fill in the blank 1 yearsarrow_forward
- a) b) Consider the following two projects: Project A B Year 0 Cash Flow -100 -73 17.3% C. d. Year 1 Cash Flow 40 30 a. 30 percent. b. 20 percent. 0 percent. 10 percent. Year 2 Cash Flow What is the incremental IRR of Project B over Project A? a. 12.6% b. 23.3% C. 1.7% d. 50 30 Year 3 Cash Flow 60 30 Year 4 Cash Flow N/A 30 Discount Rate If the standard deviation of returns on the market is 20 percent, and the beta of a well- diversified portfolio is 1.5, calculate the standard deviation of this portfolio. .15 .15arrow_forwardBaghibenarrow_forwardConsider the following investment projects for SDL Engineering. All of the projects have a three-year investment life: Project’s Cash Flow ($) Time (n) Project A Project B Project C Project D 0 -$1,500 -$1,200 -$1,600 -$3,000 1 0 $600 -$1,800 $800 2 0 $800 $800 $1,900 3 $3,000 $1,500 $2,500 $2,300 Compute the Net Present worth of each project where interest rate is 9%. Which project do you recommend based on the NPW? Other than the NPW, why else would you recommend this project? (you will be using the same rate that was for part A for this part. Calculate the IRR for each project Show all workings in excelarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education