2. In the figure below, Alternative C has a discounted payback period of approximately: years S50,000 S0 -S50,000 -$100,000 C S1S0,000 -5200,000 A B -$250,000 -5300,000 -$350,000 -$400,000 -$450,000 Investment Year Alternative A Altemative B - Alternative C True or False 3. In the same figure above, Alternative C is the most profitable alternative at the end of the planning horizon Present Worth

2. In the figure below, Alternative C has a discounted payback period of approximately: years S50,000 S0 -S50,000 -$100,000 C S1S0,000 -5200,000 A B -$250,000 -5300,000 -$350,000 -$400,000 -$450,000 Investment Year Alternative A Altemative B - Alternative C True or False 3. In the same figure above, Alternative C is the most profitable alternative at the end of the planning horizon Present Worth

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 1Q

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Given the 2-year LIBOR rate r2 = 4% and the forward rate f26 = 3%, calculate the spot rate s6. Give your answer as a percentage to 3 significant figures. Do not enter the percentage sign. For example, if your answer is 1.23%, then enter 1.23 Answer:
Can you tell me how to get the 0% to 25% rate numbers? I have to plot the NPV profiles. Year Project A Discounted cashflow Discounted cashflow 0 -50,000 -$50,000.00 -$50,000.00 1 25,000 $22,727.27 $23,584.91 2 20,000 $16,528.93 $17,799.93 3 10,000 $7,513.15 $8,396.19 4 5,000 $3,415.07 $3,960.47 5 5,000 $3,104.61 $3,736.29 NPV $3,289.02 $7,477.79 IRR 14% 14% 10% 6% Year Project B Discounted cashflow Discounted cashflow 0 -50,000 -$50,000.00 -$50,000.00 1 15,000 $13,636.36 $14,150.94 2 15,000 $12,396.69 $13,349.95 3 15,000 $11,269.72 $12,594.29 4 15,000 $10,245.20 $11,881.40 5 15,000 $9,313.82 $11,208.87 NPV $6,861.80 $13,185.46 IRR 15% 15% Rate Project A Project B 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25%
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ANSWERS: NPW= 220,148.69 NFW= 442,797.66 AW= 65,673.78 PI= 1.44 IRR i%= 31.39% ERR i%= 23.71% PAYBACK Simple= 2.5 years and Discounted= between 3&4 years B/C Conventional= 1.44 and Modified= 1.44