The Fed's action did not affect the forecasted cash flows. Вy how much did the change in the interest rate affect the project's forecasted NPV? Should the project be accepted after the rate change? Old interest rate: 10.00% New interest rate: 12% 1 2 -$1,250 Year 3 Cash flows $400 $500 $600
The Fed's action did not affect the forecasted cash flows. Вy how much did the change in the interest rate affect the project's forecasted NPV? Should the project be accepted after the rate change? Old interest rate: 10.00% New interest rate: 12% 1 2 -$1,250 Year 3 Cash flows $400 $500 $600
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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Transcribed Image Text:The Fed's action did not affect
the forecasted cash flows.
Вy how
much did the change in the interest
rate affect the project's
forecasted NPV?
Should the project
be accepted after the rate change?
Old interest rate:
10.00%
New
interest rate:
12%
Year
1
2.
3
Cash flows
-$1,250
$400
$500
$600
Transcribed Image Text:ABC Co. is considering a project
that has the following cash flow
What is the project's
data.
payback?
Year
1
2
3
4
5
Cash flows
-$1,150
$300
$310
$320
$330
$240
XYZ Co. is considering a project
that has the following cash flow
and interest rate.
What's the
project's discounted payback?
Interest rate:
10.00%
Year
1 2
3
Cash flows
-$850
$360
$480
$600
3
A firm is considering Projects S
and L, whose cash flows are shown
below.
Which project has a higher
NPV, by how much?
Interest rate:
10.00%
Year
1
2
3 4
-$1,100
$380
$380
CFs
$380
$380
-$2,000
$765
$765
CF,
$765
$765
FMA Co. analyzed the project whose
cash flows are shown below.
4
However, before the decision to
accept or reject the project, the
Federal Reserve took actions that
changed interest rates and
therefore the firm's interest rate.
The Fed's action did not affect
the forecasted cash flows.
By how
much did the change in the interest
rate affect the project's
fo:
NDV2
Should
the
nro:
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