Suppose you are offered a project with the following cash flows:Year Cash Flows01234$8,800-4,800-3,500-2,600-1,400a. What is the IRR of this offer? (Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g., 32.16.)IRR%O AcceptO Reject☆b. If the appropriate discount rate is 13 percent, should you accept this offer?c. If the appropriate discount rate is 25 percent, should you accept this offer?

IRR is one method of capital budgeting based on the time value of money where net present value is…

uppose you are offered a project with the following cash flows: ear Cash Flows 0 1 2 3 4 $8,800 -4,800 -3,500 -2,600 -1,400 What is the IRR of this offer? (Do not round intermediate calculations and enter your

uppose you are offered a project with the following cash flows: ear Cash Flows 0 1 2 3 4 $8,800 -4,800 -3,500 -2,600 -1,400 What is the IRR of this offer? (Do not round intermediate calculations and enter your

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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Question

Suppose you are offered a project with the following cash flows:
Year Cash Flows
0
1
2
3
4
$8,800
-4,800
-3,500
-2,600
-1,400
a. What is the IRR of this offer? (Do not round intermediate calculations and enter your
answer as a percent rounded to 2 decimal places, e.g., 32.16.)
IRR
%
O Accept
O Reject
☆
b. If the appropriate discount rate is 13 percent, should you accept this offer?
c. If the appropriate discount rate is 25 percent, should you accept this offer?

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A project does not necessarily have a unique IRR.(Refer to the previous problem for more informationon IRR.) Show that a project with the following cashflows has two IRRs: year 1, 2$20; year 2, $82; year3, 2$60; year 4, $2. (Note: It can be shown that ifthe cash flow of a project changes sign only once, theproject is guaranteed to have a unique IRR.)
There are two altematives: A, and A, Use trial & error and interpolation methods for finding exact value of IRR for difference between two alternatives (Draw cash flow diagram of difference). Which project is a better choice? Given MARR is 9%. Write formula and show your solution step by step A1 -$12,000 4,200 A2 -$1,000 n 800 6,225 500 6,330 500 IRR 17.43% 40.96% 1.
Determine the future value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. 2. 3 4. Invested Amount 15,000 20,000 30,000 50,000 $ $ $ U $ i = 6% 8% 12% 4% n = 12 10 20 12 Future Value
Determine the future value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. 2. 3. 4. Invested Amount 15,500 23,000 35,000 56,000 $ 67 67 $ $ $ i = 5% 5% 11% 6% n = 12 6 18 14 Future Value
A characteristic of the payback method is that it: (See your Chapter 25 notes, page 9) Uses accrual accounting inflows in the numerator of the calculation Uses the estimated expected useful life of the asset in the denominator of the calculation Incorporates cash flows received after the payback period has been reached Is based on accounting income Incorporates the time value of money Ignores total project profitability
H1. Account
Determine the present value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. 2. 3. 4. Future Amount $ 24,000 $ 18,000 $ 29,000 $ 44,000 i 5% 9% 11% 10% n= 10 13 25 9 Present Value
Here are cash flows for a project under consideration. C(0)= -$8160, C(1)=6180, and C(2)=20280. What is the IRR of the project?
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