Are there multiple IRRs for the following cash-flow sequence? How many are possible according to Descartes rule of signs? -11% per year, what is the ERR for the cash flows of this project? Let MARR 11% per year There is(are) EOY 0 Cash Flow (5) 110 1 80 2 3 50 20 4 -1.840 IRR(S) for the given cash-flow sequence A maximum of IRR value(s) is(are) suggested by the Descartes' nule of signs The ERR for the cash flows of this project is (Round to two decimal places) 5 560 6 520 7 370 8 340 9 190 10 140

Are there multiple IRRs for the following cash-flow sequence? How many are possible according to Descartes rule of signs? -11% per year, what is the ERR for the cash flows of this project? Let MARR 11% per year There is(are) EOY 0 Cash Flow (5) 110 1 80 2 3 50 20 4 -1.840 IRR(S) for the given cash-flow sequence A maximum of IRR value(s) is(are) suggested by the Descartes' nule of signs The ERR for the cash flows of this project is (Round to two decimal places) 5 560 6 520 7 370 8 340 9 190 10 140

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...

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Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?
Jasmine Manufacturing is considering a project that will require an initial investment of $52,000 and is expected to generate future cash flows of $10,000 for years 1 through 3, $8,000 for years 4 and 5, and $2,000 for years 6 through 10. What is the payback period for this project?
The management of Ryland International Is considering Investing in a new facility and the following cash flows are expected to result from the investment: A. What Is the payback period of this uneven cash flow? B. Does your answer change if year 6s cash inflow changes to $920,000?
Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)
Fenton, Inc., has established a new strategic plan that calls for new capital investment. The company has a 9.8% required rate of return and an 8.3% cost of capital. Fenton currently has a return of 10% on its other investments. The proposed new investments have equal annual cash inflows expected. Management used a screening procedure of calculating a payback period for potential investments and annual cash flows, and the IRR for the 7 possible investments are displayed in image. Each investment has a 6-year expected useful life and no salvage value. A. Identify which project(s) is/are unacceptable and briefly state the conceptual justification as to why each of your choices is unacceptable. B. Assume Fenton has $330,000 available to spend. Which remaining projects should Fenton invest in and in what order? C. If Fenton was not limited to a spending amount, should they invest in all of the projects given the company is evaluated using return on investment?