PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 6, Problem 6PS
Real and nominal flows Restate the net cash flows in Table 6.2 in real terms. Discount the restated cash flows at a real discount rate. Assume a 20% nominal rate and 10% expected inflation.
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What is the NPV for the following set of cash flows with a discount rate of 16.7 percent? (Round answer to two decimals, i.e. 32.16)
Period
Cash Flow
0
-6700
1
2200
2
3800
3
9000
4
4000
Question attached
Consider the following cash flows:
Year
Cash Flow
0
-$ 28,900
1
14,800
2
3
14,100
10,500
a. What is the profitability index for the cash flows if the relevant discount rate is 8 percent?
Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161
b. What is the profitability index if the discount rate is 13 percent?
Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161
c. What is the profitability index if the discount rate is 20 percent?
Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161
Answer is not complete.
0.181 ×
a. Profitability index
b. Profitability index
c. Profitability index
Chapter 6 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 6 - Cash flows Which of the following should be...Ch. 6 - Cash flows Reliable Electric, a major Ruritanian...Ch. 6 - Prob. 3PSCh. 6 - Prob. 4PSCh. 6 - Real and nominal flows Mr. Art Deco will be paid...Ch. 6 - Real and nominal flows Restate the net cash flows...Ch. 6 - Real and nominal flows Guandong Machinery is...Ch. 6 - Working capital Each of the following statements...Ch. 6 - Prob. 9PSCh. 6 - Project NPV Better Mousetraps research...
Ch. 6 - Project NPV A widget manufacturer currently...Ch. 6 - Project NPV Marsha Jones has bought a used...Ch. 6 - Project NPV United Pigpen is considering a...Ch. 6 - Project NPV Imperial Motors is considering...Ch. 6 - Project NPV and IRR A project requires an initial...Ch. 6 - Taxes and project NPV In the International Mulch...Ch. 6 - Depreciation and project NPV Suppose that Sudbury...Ch. 6 - Depreciation and project NPV Ms. T. Potts, the...Ch. 6 - Prob. 20PSCh. 6 - Prob. 21PSCh. 6 - Prob. 22PSCh. 6 - Equivalent annual cash flow Look at Problem 22...Ch. 6 - Equivalent annual cash flow Deutsche Transport can...Ch. 6 - Prob. 25PSCh. 6 - Mutually exclusive investments and project lives...Ch. 6 - Mutually exclusive investments and project lives...Ch. 6 - Mutually exclusive investments and project lives....Ch. 6 - Mutually exclusive investments and project lives...Ch. 6 - Mutually exclusive investments and project lives...Ch. 6 - Replacement decisions Machine C was purchased five...Ch. 6 - Replacement decisions Hayden Inc. has a number of...Ch. 6 - Replacement decisions. You are operating an old...Ch. 6 - Replacement decisions. A forklift will last for...Ch. 6 - The cost of excess capacity The presidents...Ch. 6 - Effective tax rates One measure of the effective...Ch. 6 - Equivalent annual costs We warned that equivalent...
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- Consider the following cash flows: Year Cash Flow 0 -$ 29,500 1 14,200 2 3 14,700 11,100 a. What is the profitability index for the cash flows if the relevant discount rate is 10 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. b. What is the profitability index if the discount rate is 15 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. c. What is the profitability index if the discount rate is 22 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. Profitability index b. Profitability index c. Profitability indexarrow_forwardSingle Cash Flow Present Value Inputs Single Cash Flow $1,000 Discount Rate/Period 6% Number of Periods 5 Present Value using a Time Line Period 1 2 3 4 Cash Flows Present Value of Each Cash Flow Present Value Present Value using the Formula Present Value Present Value using the PV Function Present Valuearrow_forwardFind the internal rate of return (IRR) for the following cash flows. Enter your answer as a percent and include at least two decimal points, e.g., 8.35 for 8.35 %, not 0.08. Year Cash Flow 0 750 1 200 2 375 3 250 4 100 5 75arrow_forward
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