FINANCIAL MANAGEMENT(LL)-TEXT
16th Edition
ISBN: 9781337902618
Author: Brigham
Publisher: CENGAGE L
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Chapter 10, Problem 19P
a)
Summary Introduction
To determine: The
b)
Summary Introduction
To determine: Whether the project be accepted if r=8% and if r=14%.
c)
Summary Introduction
To determine: The capital budgeting situations in which negative cash flows during or at the end of the projects life might lead to multiple
d)
Summary Introduction
To determine: The MIRR of projects when r=8% and r=14% and whether the decision based on MIRR and NPV will be the same.
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The Ulmer Uranium Company is deciding whether or not to open a strip mine whose net cost is $4.4 million. Net cash inflows are expected to be $27.7 million, all coming at the end of Year 1. The land must be returned to its natural state at a cost of $25 million, payable at the end of Year 2.
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100
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A mining company is deciding whether to open a strip mine with an initial outlay at t = 0 of $1.5 million. Cash inflows of $13.5 million would occur at the end of Year 1. The land
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a. Select the project's NPV profile.
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of Dollars)
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(Milions
of Dollars)
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1.5
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WACC (%)
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WACC (%)
WACC (%)
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b. Should the project be accepted if WACC = 10%?
-Select-
Should the project be accepted if WACC = 20%?
-Select-
c. What is the project's MIRR at WACC = 10%? Do not round intermediate calculations. Round your answer to two decimal places.
%
What is the project's MIRR at WACC = 20%? Do not round intermediate calculations. Round your answer to two decimal places.
%
Does MIRR lead to the same accept/reject decision for this project as the NPV…
The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for
reinvestment elsewhere. The company's required rate of return is 18%.
Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables.
Required:
a. What is the net present value of the proposed mining project?
b. Should the project be accepted?
Complete this question by entering your answers in the tabs below.
Required A Required B
> Answer is complete but not entirely correct.
What is the net present value of the proposed mining project?
Note: Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.
Net present value
$ (132,434) X
Chapter 10 Solutions
FINANCIAL MANAGEMENT(LL)-TEXT
Ch. 10 - Define each of the following terms:
Capital...Ch. 10 - What types of projects require the least detailed...Ch. 10 - Explain why the NPV of a relatively long-term...Ch. 10 - When two mutually exclusive projects are being...Ch. 10 - Suppose a firm is considering two mutually...Ch. 10 - A project has an initial cost of 40,000, expected...Ch. 10 - Refer to Problem 10-1. What is the project’s IRR?
Ch. 10 - Refer to Problem 10-1. What is the projects MIRR?Ch. 10 - Prob. 4PCh. 10 - Prob. 5P
Ch. 10 - Prob. 6PCh. 10 - Your division is considering two investment...Ch. 10 - Edelman Engineering is considering including two...Ch. 10 - Davis Industries must choose between a gas-powered...Ch. 10 - Project S has a cost of 10,000 and is expected to...Ch. 10 - Your company is considering two mutually exclusive...Ch. 10 - Prob. 12PCh. 10 - Cummings Products is considering two mutually...Ch. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Shao Airlines is considering the purchase of two...Ch. 10 - The Perez Company has the opportunity to invest in...Ch. 10 - Filkins Fabric Company is considering the...Ch. 10 - Prob. 19PCh. 10 - The Aubey Coffee Company is evaluating the...Ch. 10 - Your division is considering two investment...Ch. 10 - Prob. 22PCh. 10 - Start with the partial model in the file Ch10 P23...Ch. 10 - What is capital budgeting?Ch. 10 - Prob. 2MCCh. 10 - c. (1) Define the term net present value (NPV)....Ch. 10 - Prob. 4MCCh. 10 - Draw NPV profiles for Franchises L and S. At what...Ch. 10 - What is the underlying cause of ranking conflicts...Ch. 10 - Define the term modified IRR (MIRR). Find the...Ch. 10 - What does the profitability index (PI) measure?...Ch. 10 - (1) What is the payback period? Find the paybacks...Ch. 10 - Prob. 10MCCh. 10 - In an unrelated analysis, you have the opportunity...Ch. 10 - You are also considering another project that has...
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