Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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QUESTION 37
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To estimate the
future value of a resource, the World Bank and most businesses use _____.a. a 10% annual discount rateb. a 20% annual decreasec. a 20% annual gain in valued. a 10% annual increasee. complicated calculations based upon the specific resource
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- Question 15 Company 15 is considering undertaking a new project. The financial controller has computed Net Present Value (NPV) of the project at two different discount rates. The NPV at a discount rate of 12% is £4,700 positive and at a discount rate of 20%, it is £7,400 negative. You are required to compute the Internal Rate of Return (IRR) using linear interpolation or extrapolation. The Internal Rate of Return of this project is which of the following: A 23.1% B 16.9% C 15.1% D 8.9%arrow_forwardQuestion content area top Part 1 Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): LOADING... . a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for years 1 and 2?arrow_forwardQUESTION 5 Compare the following two mutually exclusive projects on the basis of Accounting Rate of Return (ARR). Cash flows and salvage values are in thousands of ringgit. Use the straight line depreciation method. Year Cash Outflow Cash Inflow Salvage Value Year Cash Outflow Cash Inflow Salvage Value Required: 0 -250 0 -228 Project A 1 91 Project B 1 87 a. Compute ARR for Project A b. Compute ARR for Project B C. Advise Management on which project to select 2 2 130 110 3 3 105 10 84 18arrow_forward
- Nonearrow_forwardplease give me answer dont give answer in image formatarrow_forwardQUESTION FIVE You are considering investing in a new project called Lolis with the following cash flows: Annual Cash Flow (K) 40,000 120,000 Year 1 3 150,000 150,000 180,000 4 5 The initial cash outflow amounted to K400,000 and the cost of capital is 10%. Required: a) Calculate the following financial viability indicators: i. Undiscounted payback period ii. Net Present Value i. Discounted Payback period Profitability Index Internal Rate of Return iv. V. b) Comment on whether the project is financial viable or not. (4arrow_forward
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