Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- The following table gives the available projects (in $millions) for a firm. A B C D E F G 90 30 60 50 150 40 20 60% 77% 35% 8% 10% 40% 40% 80 70 65 -10 100 32 10 Initial investment IRR NPV If the firm has a limit of $150 million to invest, what is the maximum NPV the company can obtain? Multiple Choice 160arrow_forwardA firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 4 5 Project 1 -$450 $50 $50 $50 $200 $200 Project 2 -$550 $200 $200 $150 $150 $150 Which project would you recommend? Select the correct answer. a. Both Projects 1 and 2, since both projects have IRR's > 0. b. Neither Project 1 nor 2, since each project's NPV < 0. c. Both Projects 1 and 2, since both projects have NPV's > 0. d. Project 1, since the NPV1 > NPV2. e. Project 2, since the NPV2 > NPV1.arrow_forwardA firm with a WACC of 10% is considering the following mutually exclusive projects: 1 2 3 5 + ㅓ Project 1 Project 2 -$300 $60 $60 $60 $175 $175 -$550 $250 $250 $150 $150 $150 Which project would you recommend? Select the correct answer. Oa. Both Projects 1 and 2, since both projects have NPV's > 0. Ob. Both Projects 1 and 2, since both projects have IRR's > 0. Oc. Project 2, since the NPV2 > NPV1. Od. Neither Project 1 nor 2, since each project's NPV NPV2.arrow_forward
- Project A: IRR = 4%, Initial cost =100, NPV = 200 Project B: IRR = 14%, Initial cost =200, NPV = 230 Project C: IRR = 6%, Initial cost = 300, NPV = 300 Project D: IRR = 22%, Initial cost = 100, NPV = 260 If you can only choose 1 of the above projects above, which one should you choose? Project A Project B Project C Project D Not enough information to determine which project is preferredarrow_forwardHi please provide stepwise solution of all and not handwritten please good way ill like.arrow_forwardThe profitability analysis of three projects is provided below: Project A Project B Project C NPV $10,000 $5,000 - $1,000 IRR 10% 15% 15% WACC 8% 12% 16% If these projects were independent, which project(s) would be accepted? Why? If these projects were mutually exclusive, which project(s) would be accepted? Why?arrow_forward
- URGENTarrow_forwardA company only has £2,000 to invest at time t0 in projects P, Q and R. Each project is infinitely divisible but cannot be undertaken more than once. Project Investment at t0 NPV P £700 £224 Q £1,000 £360 R £1,500 £510 How much should be invested in project R to maximise the NPV achieved? A £0 B £1,000 C £1,350 D £2,000arrow_forwardA firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project? Input area: Required Return Year 0 Year 1 Year 2 Year 3 (Use cells A6 to B10 from the given information to complete this question.) Output area: 14% ($41,000) $20,000 $23,000 $14,000 IRRarrow_forward
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