PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 10, Problem 27PS
Summary Introduction
To discuss: Whether it is worth to pay test.
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Students have asked these similar questions
Suppose your firm is considering investing in a project with the cash flows shown
below, that the required rate of return on projects of this risk class is 9 percent, and that
the maximum allowable payback and discounted payback statistics for the project are
3.5 and 4.5 years, respectively.
Time:
Cash flow:
0
-$15, 200
MIRR
1
$3,000
3
2
$4,200 $3,400
Use the MIRR decision rule to evaluate this project. (Do not round intermediate
calculations and round your final answer to 2 decimal places.)
%
5
$3,400 $3,200
6
$3,000
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of
this risk class is 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and
3.5 years, respectively.
Time:
Cash flow:
0
1
2
-$241,000 $66,400 $84,600
Payback
Use the payback decision rule to evaluate this project.
Note: Round your answer to 2 decimal places.
years
4
3
$141,600 $122,600
Should the project be accepted or rejected?
(Click to select)
5
$81,800
Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Use the IRR decision to evaluate this project; should it be accepted or rejected?
Time
0
1
2
3
4
5
6
Cash Flow
–$
5,000
$
1,200
$
1,400
$
1,600
$
1,600
$
1,100
$
2,000
Chapter 10 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 10 - Terminology Match each of the following terms to...Ch. 10 - Project analysis True or false? a. Sensitivity...Ch. 10 - Sensitivity analysis Otobais staff (see Section...Ch. 10 - Prob. 4PSCh. 10 - Prob. 7PSCh. 10 - Scenario analysis What is the NPV of the electric...Ch. 10 - Prob. 9PSCh. 10 - Break-even analysis Break-even calculations are...Ch. 10 - Prob. 11PSCh. 10 - Prob. 12PS
Ch. 10 - Prob. 13PSCh. 10 - Break-even analysis A financial analyst has...Ch. 10 - Fixed and variable costs In a slow year, Deutsche...Ch. 10 - Operating leverage You estimate that your cattle...Ch. 10 - Prob. 17PSCh. 10 - Prob. 20PSCh. 10 - Real options Explain why options to expand or...Ch. 10 - Prob. 22PSCh. 10 - Real options True or false? a. Decision trees can...Ch. 10 - Prob. 24PSCh. 10 - Real options An auto plant that costs 100 million...Ch. 10 - Decision trees Look back at the Vegetron electric...Ch. 10 - Prob. 27PSCh. 10 - Prob. 28PSCh. 10 - Prob. 29PSCh. 10 - Prob. 32PS
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