The following are the cash flows of two projects: Year 0 1 2 3 4 Project A $ (220) 100 100 100 100 Project A B Project B $ (220) 120 120 120 What are the internal rates of return on projects A and B? Note: Enter your answers as a percent rounded to 2 decimal places. IRR % %

The following are the cash flows of two projects: Year 0 1 2 3 4 Project A $ (220) 100 100 100 100 Project A B Project B $ (220) 120 120 120 What are the internal rates of return on projects A and B? Note: Enter your answers as a percent rounded to 2 decimal places. IRR % %

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

See similar textbooks

Related questions

Q: Someone offers an investment opportunity that will pay you $725 at the end o next 17 years. How much…

A: Maximum value is the present value of cash flow from the annuity based on the time value of money…

Q: Closed-end investment companies O have a fixed number of shares. can trade at a price that is…

A: Close end investment companies are companies that sell a limited number of shares to investors and…

Q: Contract Month Mar May July Sep Corn 5,000 bushels Low Open High Settle Chg Open Int 455.125 457.000…

A: Futures contracts play a crucial role in commodities trading, allowing participants to hedge risks…

Q: Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash…

A: Free cash flows are the cash flows available to investors after the firm has met all operating needs…

Q: You buy a principal STRIP that is stripped from a Treasury note with a coupon rate of 2.5 percent…

A: A treasury note is a kind of debt security issued by the government and private companies to the…

Q: Use the value-at-risk method to determine the maximum percentage loss of the Brazilian real over the…

A: Value at Risk (VaR) is a widely used risk management technique that quantifies the potential loss an…

Q: What must be the price of a $2,000 bond with a 5.9% coupon rate, annual coupons, and 25 years to…

A: "PV" stands for "Present Value." It represents the current worth of a sum of money that is to be…

Q: past year, China has experienced an inflation rate of 22 percent, in contrast to the U.S. inflation…

A: In actual world there are increases in prices due to inflation and other is due to change in due to…

Q: You invested $25,000 in a mutual fund at the beginning of the year when the NAV was $33.16. At the…

A: Rate of return for mutual fund holders can be calculated by using equation below

Q: yed bought 168 day Government of Canada T-Bills on 30 A sigher price that presented a yield to the…

A: Treasury bills are issued by the government and quite risk free investment and issued on the…

Q: An individual is currently 30 years old, wants to work until the age of 65 and plans on dying at the…

A: Interest rate = rate = 5%Annual spending = pmt = $40,000Life expectancy after retirement = nper = 85…

Q: Assume you graduate from university with a $37,000 student loan. If your interest rate is fixed at…

A: The monthly payment amount can be calculated with the help of present value of annuity function.…

Q: Hubbard Industines just paid a common I dividend, Do, of $1.40. It expects to grow at a constant…

A: The model that can be used for determining the stock price if the dividend is given along with the…

Q: Janine is 46 and has a good job at a biotechnology company. Janine estimates that she will need…

A: Future value is the amount deposited and amount of interest accumulated over the period of deposit…

Q: Assuming a 5% (0.05) interest rate, $500 invested today in a savings account today will be worth…

A: This is based on the concept of “compounding”. Compounding is an important element of time value of…

Q: Purple Panda Pharmaceuticals Inc.'s free cash flows (FCFS) are expected to grow at a constant…

A: Value of operations is computed by following formula:-Value of operations = whereFCF = Expected free…

Q: If the future value of an ordinary, 6-year annuity is $7,500 and interest rates are 7.5 percent,…

A: In future value of annuity due, cash flows are occur at the start of the year. Due to this, each…

Q: Please give solution in correct and step by step format thanku Don't give solution in image…

A: Payback period is a capital budgeting tehnique used for making investment decisions.Payback period…

Q: What is the bond's (annualized) yield to maturity? What is the bond's (annualized) yield to call? If…

A: The annual yield rate calculates a bond's annualized return on investment by taking into account…

Q: Year 1 2 3 4 Cash Flow $800 1,010 1,280 1,180

A: Present value is the equivalent value based on the time value of money of the future cash flow that…

Q: You presently TOCK 15%. You calculate your real return on investment as 11.50 %. According t…

A: Fisher effect tells that how much the inflation and how much is impact inflation on interest rate.

Q: 20. How much would the total repayments differ between a fully amortizing 25 year loan for $500,000…

A: Repayments of loan or amortization of loan refers to the systematic payment of loan principal and…

Q: A project requires an initial investment of $100,000 and is expected to produce a cash inflow before…

A: Companies can allocate their limited resources (capital) to projects or assets with the highest…

Q: Future Value At age 30 you invest $3,100 that earns 8.75 percent each year. At age 35 you invest…

A: Future value refers to the anticipated value of an investment or asset at a future point in time,…

Q: A stock is currently priced at $52 and will move up by a factor of 1.14 or down by a factor of .90…

A: Option Market is a Stock Market Startegy. Under which investor will not purchase the share of the…

Q: Assume you invest $15,000 today. How much will you have in six years at an interest rate of 9%?…

A: Future value:Based on the investment's current value and anticipated future growth, the future value…

Q: Use the following data to estimate the value of a European put option with X = $120. The current…

A: Option Market is a Stock Market Startegy. Under which investor will not purchase the share of the…

Q: A bank which starts with ALL of $1.48 million at the beginning the year, charges off worthless loans…

A: ALL at beginning of year = $1.48 millionCharging off worthless loans =$0.94 millionRecovery = $0.12…

Q: Ella has a mask collection of 400 masks. She keeps 144 of the masks on her wall. What percentage of…

A: Solution:Percentage of mask collection on wall = (Masks on wall / Total mask collection) x 100

Q: Stevenson's Bakery is an all-equity firm that has projected perpetual EBIT of $195,000 per year. The…

A: The combination of a company's equity and debt values is called to as its "leveraged value." It is a…

Q: Wellington Jumbo Prawn Corp. is a seafood company that exports high-quality prawns to North American…

A: When the company receives profits and distributes them among the shareholders. That share of profit…

Q: The following spot rates are observed today. Maturity Spot rate (%) 1 year 0.75 2 year 1.50 3 year…

A: Managing interest rate expectations is crucial for making informed investment decisions. The spot…

Q: You want to have $3.15 million when you retire in 35 years. You feel that you can save $775 per…

A: The concept of time value of money will be used here. As per the concept of time value of money the…

Q: Fidelity bond does not cover

A: Fidelity bonds are a form of insurance policy that offers protection against losses due from…

Q: How much would you be willing to pay for a $1,000 bond that has a coupon rate of 7%, with 14 years…

A: Current price of bond is that price which can be paid for purchase of the bond. It is also called…

Q: Suppose Hu's Software Design, Inc. from problem 6 has a choice between two computer systems. The…

A: The equipment that has different economic lives is compared to the annual equivalent cost which…

Q: State of Economy Bust Boom Probability of State of Economy 0.30 0.70 Bust Security Returns if State…

A: Expected return is defined as the amount of money an investor could earn or lose on an investment at…

Q: Kroger has just paid a quarterly dividend of $1. Growth this year is expected and dividends are…

A: The value of a share of common stock is equal to the present value of all future cash flows…

Q: You are a consultant to a large manufacturing corporation that is considering a project with the…

A: The Capital Asset Pricing Model (CAPM) is a widely used financial theory that relates the expected…

Q: Nebraska Furniture Mart (NFM) is considering a zero-coupon bond issue to raise $500 million in order…

A: The price of a zero coupon bond is equal to the present value of the face value of the zero coupon…

Q: You are part of a consulting team working with a well-established technology company that is…

A: A comprehensive long-term financial plan for a well-established technology company involves several…

Q: 4. Suppose that at there is a maintenance expense of P3,000 at the first year, P3,500 at the second…

A: Present value illustrates the current value of a sum of money that will be received or paid in the…

Q: a. Calculate earnings per share for each level of indebtedness. Calculate the EPS below: (Round to…

A: In calculation of earning per share, first calculate the earning available to the common share…

Q: reen Caterpillar Garden Supplies Inc. is a small firm, and several of its managers are worried about…

A: Payback period is that period of time under which investor will received his invested amount return.…

Q: school year. The annual interest rate is 5 percent. How much money must you deposit in an account…

A: Present value illustrates the current value of a sum of money that will be received or paid in the…

Q: what is the company's value?

A: We can determine the value of the company using the formula below:

Q: Branzini, Inc. has two divisions, Nord and Sud, the revenues of which constitute $60,000,000 and…

A: Business divisions refer to the organizational structure of the different segments in which the…

Q: ou've collected the following information from your favorite financial website. 52-Week Price Lo…

A: Required return refers to the minimum return to be earned on the amount of investment made by the…

Q: to save $59000 in an account which pays 6% compounded quarterly by making semiannual deposits for 10…

A: Annuity is series of equal and fixed uniform payments along the period of annuities.

Q: Apple is planning to incorporate new software for the price of $600000 today in order to produce a…

A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…

Question

The following are the cash flows of two projects:
Year
0
1
2
3
4
Project A
$ (220)
100
100
100
100
Project B
$ (220)
120
120
120
What are the internal rates of return on projects A and B?
Note: Enter your answers as a percent rounded to 2 decimal places.
Project
A
B
IRR
%
%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define IRR

VIEW

Step 2: Excel snip is as follows-

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Compute the internal rate of return for the cash flows of the following two projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Year Project A 0 -$13,800 Project B -$ 11,400 1 5,400 2,900 2 6,200 8,500 3 5,000 4,600 Project A Project B % %
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 %
The following are the cash flows of two projects: Year Project A Project B 0 $ (390 ) $ (390 ) 1 220 290 2 220 290 3 220 290 4 220 What is the payback period of each project? (Round your answers to 1 decimal place.) I In Years
Compute the internal rate of return for the cash flows of the following two projects: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Year Project A Project B 0 –$ 9,800 –$ 7,400 1 3,800 2,100 2 4,600 5,300 3 3,400 3,000 Internal rate of return Project A % Project B %
A project has the following cash flows set out below. What is the profitability index of this project if the relevant discount rate is 2 percent? Enter your final answer to two decimal places. Year Cash flow 0 -1,745 1 537 2 2,066 3 3,912
6. You are choosing between two projects. The cash flows for the projects are given in the following Data table ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A −$48 $27 $19 $22 $15 B −$100 $22 $39 $48 $62 The IRR for project A is __________________________%. (Round to one decimal place.) The IRR for project B is____________________________%.(Round to one decimal place.) If your discount rate is 5.4%, the NPV for project A is $_______________million.(Round to two decimal places.) If your discount rate is 5.4%, the NPV for project B is $______________ million.(Round to two decimal places.) NPV and IRR rank the two projects differently because they are measuring different things. ___________________is measuring value creation, while ___________________is measuring return on investment. Because returns do not scale with different levels of investment, the two measures may give different rankings when…
onsider the following cash flows: C0=-$42 C1=+$38 C2=+$38 C3=+$38 C4=-$76 a. Which two of the following rates are the IRRs of this project?
Compute the internal rate of return for the cash flows of the following two projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Year Project A Project B 0 –$ 10,800 –$ 8,400 1 4,200 2,300 2 5,000 6,100 3 3,800 3,400
Consider the following information: Cash Flows ($) Project C0 C1 C2 C3 C4 A –5,300 1,300 1,300 2,700 0 B –700 0 600 2,300 3,300 C –5,200 3,400 1,700 800 300 a. What is the payback period on each of the above projects? (Round your answers to 2 decimal places.)
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 -$ 15,900 -$ 15,900 1 6,710 7,290 2 7,290 7,730 3 4,810 3,630 a. What is the IRR of Project X? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decim b. What is the IRR of Project Y? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decim c. What is the crossover rate for these two projects? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decim a. IRR b. IRR % % c. Crossover rate %
Compute the internal rate of return for the cash flows of the following two projects: Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Year Project A Project B 0 −$ 13,800 −$ 11,400 1 5,400 2,900 2 6,200 8,500 3 5,000 4,600
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 $20,000 $20,000 1 8,850 10,100 23 9,100 7,800 8,800 8,700 Calculate the IRR for each project. (Round your answers to 2 decimal places. (e.g., 32.16)). IRR Project X Project Y % % What is the crossover rate for these two projects? (Round your answer to 2 decimal places. (e.g., 32.16)). Crossover rate %

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

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

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

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

SEE MORE TEXTBOOKS