Two investments have the following pattern of expected returns:Investment AYear 1 Year 2Year 3 Year 4Year 4(Sale)BTCF $6,300$11,300 $13,300 $16,300 $133,000Investment BYear 4Year 1Year 2 Year 3 Year 4(Sale)BTCF $3,300$5,300$2,300$6,300$193,000Investment A requires an outlay of $123,000 and Investment B requires an outlay of $133,000.Required:a. What is the BTIRR on each investment?b. If the BTIRR were partitioned based on BTCFO and BTCFS what proportions of the BTIRR would be represented byeach?c. Which investment would be preferable?Complete this question by entering your answers in the tabs below.Required Required RequiredABCWhat is the BTIRR on each investment? (Round your answers to 2 decimal places.)Investment InvestmentABBTIRR%%< Required ARequired B >

BTIRR refers to the before tax internal rate of return is the percentage of return at which the net…

Answered: Two investments have the following…

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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Justin Lieberman must earn a minimum rate of return of 16.79% as compensation for the risk of the following investment a. Use present value techniques to estimate the IRR on this investment. b. On the basis of your finding in part a, should Justin make the proposed investment? a. The yield on this investment is %. (Round to two decimal places.) Data table Initial Investment End of Year 1 2345 $15,119 Income $3,957 $4,879 $5,900 $3,601 $2,000 - X C
You are evaluating an investment project, which has a cost of $161,000 today and is expected to provide after-tax annual cash flows of $20,000 for seven years. In order to compute the MIRR, you are modifying the cash flows. Assuming the cost of capital is 9.1 percent, what is the terminal cash flow of the modified cash flows? Question 12 options: $173,074 $176,474 $178,474 $180,974 $182,874 $184,574
An investor is considering two investment projects. Project A requires an initial payment of £12,000. In return, the investor will receive a payment of £17,400 after one year. Project B requires an initial payment of £10,300. In return, the investor will receive a payment of £1,240 at the end of every month for one year. Calculate the cross-over rate of the projects 数字 Enter a percentage correct to 1 decimal place. % What is the payback period of each project? Project A:数字 Project B:数字 months months
A real estate investment has the following expected cash flows: Year Cash Flows 1 $14,000 2 19,000 3 19,000 4 25,000 The discount rate is 3 percent. What is the investment’s present value? Round your answer to 2 decimal places
For your ongoing business, the required investments are $420,000 for X1, $550,000 for X2, $720,000 for X3, and $800,000 for X4. X0 denotes the do-nothing alternative. Moreover, you had information about the internal rates of return for the incremental projects: IRR for X1-XO is 18%, IRR for X2-XO is 20%, IRR for X3-XO is 25%, IRR for X4-XO is 30%, IRR for X2-X1 is 10%, IRR for X3-X1 is 21%, IRR for X4-X1 is 19%, IRR for X3- X2 is 18%, IRR for X4-X3 is 14%, IRR for X4-X2 is 23%. Using the information above, if the MARR is 15%, what system should be selected? а) ХО O b) X2 с) XЗ d) None of the answers are correct e) X1 O f) X4
There are two investment options available for you. The first option requires you to invest 5,000$ in 1 year with 7% interest rate and collect your return in year 27. Second option requires you to put 500$ today with 11% interest rate and collect the fund in year 65. What is the compounding effect combination of these two investments? Select one: a.470,570 b.410,795 C.490,510 d.465,070
You’re trying to choose between two different investments, both of which have upfront costs of K75,000. Investment G returns K135,000 in six years. Investment H returns K195,000 in 10 years. Which of these investments has the higher return?
A project has an initial capital outlay of Kshs.150,000 and unequal net cash-flows of Kshs 100,0000 in year one, Kshs 80,000 in year two, Kshs 70,000 in year three, Kshs 60,000 in year four, Kshs 50,000 in year five and a Kshs. 30,000 residual values at the end of its life in year six. REQUIRED i. Calculate the Accounting Rate of Return ii. Calculate the Internal Rate of Return iii. From your studies, what is the importance of Internal Rate of Return?
An investment will pay $600 at the end of each of the next 2 years, $700 at the end of Year 3, and $1,000 at the end of Year 4. What is its present value if other investments of equal risk earn 6 percent annually? a. $1,821.82 b. $1,913.83 c. $2,297.07 d. $2,479.86 e. $2,735.85
Annual cash inflows that will arise from two competing investment projects are given below: Year Investment A Investment B 1 $7,000 $ 10,000 2 8,000 3 9,000 4 10,000 $ 34,000 9,000 8,000 7,000 $ 34,000 The discount rate is 7%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: Compute the present value of the cash inflows for each investment.
An investment project that gives cash flow for the first year $ 10,000 and the second $ 15,000; The interest rate is 8.5%; The present value of the investment is equal to (to the nearest decimal place): Select one: a. $ 25,000 b. $ 21929 c. $ 30,000 d. $ 20,000
PRESENT AND FUTURE VALUES OF A CASH FLOW STREAM An investment will pay $150 at the end of each of the next 3 years, $250 at the end of Year 4, $350 at the end of Year 5, and $550 at the end of Year 6. a. If other investments of equal risk earn 10% annually, what is its present value? Round your answer to the nearest cent. $ b. If other investments of equal risk earn 10% annually, what is its future value? Round your answer to the nearest cent. $

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