Refer to Exhibit 12–2. Is the return on this investment proposal exactly 14%, more than 14%, orless than 14%? Explain
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Refer to Exhibit 12–2. Is the return on this investment proposal exactly 14%, more than 14%, or
less than 14%? Explain
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- Is the return on this investment proposal exactly 14%, more than 14%, or less than 14%? Explain. The Net Present Value Method-An Extended ExampleA firm evaluates all of its projects by applying the IRR rule. If the required return is 18 percent, will the firm accept the following project?CF0 = -$30,000CO1 = $20,000C02 = $14,000C03 = $11,000 yes or noConsider the following project balance profiles for proposed investment projects. Statement 1-For Project A, the cash now at the end of year 2 is $100.Statement 2-For Project C, its net future worth at the end of year 2 is $150.Statement 3-For Project B, the interest rate used is 25%.Statement 4-For Project A, the rate of return should be greater than 15%.Which of the statement(s) above is (are) correct?(a) Just Statements 1 and 2(b) Just Statements 2 and 3(c) Just Statements 1 and 3( d) Just Statements 2, 3, and 4
- With a required rate of return of 17%, the IRR of a standard capital budgeting project is equal to 19%. What does this say about this project’s NPV? Select one: a. The NPV is greater than zero. b. The NPV is equal to zero. c. The NPV is less than zero. d. The NPV is equal to the ratio given by 19% divided by 17%. e. There is not enough information to determine. Clear my choiceWith a required rate of return of 17%, the IRR of a standard capital budgeting project is equal to 19%. What does this say about this project’s NPV? Select one: a. The NPV is greater than zero. b. The NPV is equal to zero. c. The NPV is less than zero. d. The NPV is equal to the ratio given by 19% divided by 17%. e. There is not enough information to determine.If the investment rate is 12%, the borrowing rate is 15%, and the MARR is 14%, what is the rate of return of this project?
- What are the internal rates of return (IRR) on the three projects? Does the IRR rule in this case give the same decision as NPV? How do you know? If the opportunity cost of capital is 11%, what is the profitability index for each project? Please analyze if, in general, decisions based on the profitability index are consistent with decisions based on NPV. What is the most generally accepted measure to choose between the projects? Please justify your answer. Project A -5000 +1000 +1000 +3000 0 B -1000 0 +1000 +2000 +3000 C -5000 +1000 +1000 +3000 +5000 I will need full analysis (qualitative examples and references citations and examples of relative current investments of big companies.30- If an investment is producing an internal rate of return that is equal to therequired return, the Net Present Value of the project will be ____ and theProfitability Index of the project will be ______. a. Negative; Greater than oneb. Negative; Onec. Zero; Oned. Positive; Onee. Positive; Greater than onef. Zero; Less than oneAn IT Project with MARR=10%. If this investment is tested at i=15%, its NPV is +$4550 at i=15%; and it becomes -$760 at i=20%, what is the expected ROR or IRR?
- What is the expected NPV of the following decision tree? The net flow and associated probability is shown above and below each branch for the two-year project. a. -R18.72m b. -R5.56m c. R5.00m d. R16.12m9 If the IRR of a normal investment project is 12%, then the project's NPV would be: A Positive at a discount of 12% B Positive at a discount rate of 13% C Negative at a discount rate of 15% D Negative at a discount rate of 8%• Sienna plc has deduced the net present value of a potential investment project at two discount rates. The relevant data are as follows: Discount rate 20% 30% NPV (£000) 60 (120) What is the approximate internal rate of return of the project? A 16.7% B 23.3% C 26.6% D 33.3%