The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the accounting break even level of output. Introduction: Internal rate of return (IRR) is a projected rate of return for a particular project based on the given incremental cash flows of the project. This method considers all the cash flows of the particular project and adjusts the time value of money like the net present value. Payback period refers to the number of periods it will take to recover the initial investments. Net present value (NPV) refers to the discounted value of the future cash flows at present. The company should accept the project even if the net present value is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value. Accounting breakeven is a sales point at which, there is no profit or loss. It is the most widely used measure of the breakeven point.

Question

Want to see the full answer?

Answer 1

Question

Chapter 11, Problem 16QP

a)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the accounting break even level of output.

Introduction:

Internal rate of return (IRR) is a projected rate of return for a particular project based on the given incremental cash flows of the project. This method considers all the cash flows of the particular project and adjusts the time value of money like the net present value.

Payback period refers to the number of periods it will take to recover the initial investments.

Net present value (NPV) refers to the discounted value of the future cash flows at present. The company should accept the project even if the net present value is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

Accounting breakeven is a sales point at which, there is no profit or loss. It is the most widely used measure of the breakeven point.

b)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the cash breakeven level of output

Introduction:

Cash breakeven specifies a sales level which can result in a zero operating cash flow.

c)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the financial breakeven level of output.

Introduction:

Financial breakeven is a point that occurs at the time when a particular project breaks even on a financial basis. This means that the net present value is zero.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

use excel/show all excel formulas answering the following LO3 20. Sensitivity Analysis We are evaluating a project that costs $1.68 million, has a six-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 90,000 units per year. Price per unit is $37.95, variable cost per unit is $23.20, and fixed costs are $815,000 per year. The tax rate is 21 percent, and we require a return of 11 percent on this project. a. Calculate the base-case cash flow and NPV. What is the sensitivity of NPV to changes in the sales figure? Explain what your answer tells you about a 500-unit decrease in projected sales. b. What is the sensitivity of OCF to changes in the variable cost figure? Explain what your answer tells you about a $1 decrease in estimated variable costs. LO3 21. Scenario Analysis In the previous problem, suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to…

A3 8aii You are considering a new product launch. The project will cost $680,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 100 units per year, price per unit will be $19,000, variable cost per unit will be $14,000, and fixed costs will be $150,000 per year. The required return on the project is 15%, and the relevant tax rate is 35%. Ignore the half-year rule for accounting for depreciation. a. Calculate the following six numbers for this project. Round your answers to two decimal places. (ii) Profitability Index (PI)

11. b A firm is considering the following projects. Its opportunity cost of capital is 10%. Project: Time: 0 1 2 3 4 A -5000 +1000 +1000 +3000 0 B - 1000 0 +1000 +2000 +3000 C - 5000 +1000 +1000 +3000 +5000 c. If you use a cutoff period of 3 years with the discounted payback rule, which projects would you accept? d. Which projects have positive NPVs? e. "Payback gives too much weight to cash flows that occur after the cutoff date." True or false?

Answer 2

Question

Chapter 11, Problem 16QP

a)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the accounting break even level of output.

Introduction:

Internal rate of return (IRR) is a projected rate of return for a particular project based on the given incremental cash flows of the project. This method considers all the cash flows of the particular project and adjusts the time value of money like the net present value.

Payback period refers to the number of periods it will take to recover the initial investments.

Net present value (NPV) refers to the discounted value of the future cash flows at present. The company should accept the project even if the net present value is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

Accounting breakeven is a sales point at which, there is no profit or loss. It is the most widely used measure of the breakeven point.

b)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the cash breakeven level of output

Introduction:

Cash breakeven specifies a sales level which can result in a zero operating cash flow.

c)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the financial breakeven level of output.

Introduction:

Financial breakeven is a point that occurs at the time when a particular project breaks even on a financial basis. This means that the net present value is zero.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 11, Problem 16QP

a)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the accounting break even level of output.

Introduction:

Internal rate of return (IRR) is a projected rate of return for a particular project based on the given incremental cash flows of the project. This method considers all the cash flows of the particular project and adjusts the time value of money like the net present value.

Payback period refers to the number of periods it will take to recover the initial investments.

Net present value (NPV) refers to the discounted value of the future cash flows at present. The company should accept the project even if the net present value is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

Accounting breakeven is a sales point at which, there is no profit or loss. It is the most widely used measure of the breakeven point.

b)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the cash breakeven level of output

Introduction:

Cash breakeven specifies a sales level which can result in a zero operating cash flow.

c)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the financial breakeven level of output.

Introduction:

Financial breakeven is a point that occurs at the time when a particular project breaks even on a financial basis. This means that the net present value is zero.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 11, Problem 16QP

a)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the accounting break even level of output.

Introduction:

Internal rate of return (IRR) is a projected rate of return for a particular project based on the given incremental cash flows of the project. This method considers all the cash flows of the particular project and adjusts the time value of money like the net present value.

Payback period refers to the number of periods it will take to recover the initial investments.

Net present value (NPV) refers to the discounted value of the future cash flows at present. The company should accept the project even if the net present value is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

Accounting breakeven is a sales point at which, there is no profit or loss. It is the most widely used measure of the breakeven point.

b)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the cash breakeven level of output

Introduction:

Cash breakeven specifies a sales level which can result in a zero operating cash flow.

c)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the financial breakeven level of output.

Introduction:

Financial breakeven is a point that occurs at the time when a particular project breaks even on a financial basis. This means that the net present value is zero.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 11, Problem 16QP

a)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the accounting break even level of output.

Introduction:

Internal rate of return (IRR) is a projected rate of return for a particular project based on the given incremental cash flows of the project. This method considers all the cash flows of the particular project and adjusts the time value of money like the net present value.

Payback period refers to the number of periods it will take to recover the initial investments.

Net present value (NPV) refers to the discounted value of the future cash flows at present. The company should accept the project even if the net present value is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

Accounting breakeven is a sales point at which, there is no profit or loss. It is the most widely used measure of the breakeven point.

b)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the cash breakeven level of output

Introduction:

Cash breakeven specifies a sales level which can result in a zero operating cash flow.

c)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the financial breakeven level of output.

Introduction:

Financial breakeven is a point that occurs at the time when a particular project breaks even on a financial basis. This means that the net present value is zero.

Answer 6

Chapter 11, Problem 16QP

a)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the accounting break even level of output.

Introduction:

Internal rate of return (IRR) is a projected rate of return for a particular project based on the given incremental cash flows of the project. This method considers all the cash flows of the particular project and adjusts the time value of money like the net present value.

Payback period refers to the number of periods it will take to recover the initial investments.

Net present value (NPV) refers to the discounted value of the future cash flows at present. The company should accept the project even if the net present value is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

Accounting breakeven is a sales point at which, there is no profit or loss. It is the most widely used measure of the breakeven point.

Answer 7

Chapter 11, Problem 16QP

a)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the accounting break even level of output.

Introduction:

Internal rate of return (IRR) is a projected rate of return for a particular project based on the given incremental cash flows of the project. This method considers all the cash flows of the particular project and adjusts the time value of money like the net present value.

Payback period refers to the number of periods it will take to recover the initial investments.

Net present value (NPV) refers to the discounted value of the future cash flows at present. The company should accept the project even if the net present value is positive or greater than zero. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value.

Accounting breakeven is a sales point at which, there is no profit or loss. It is the most widely used measure of the breakeven point.

Answer 8

b)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the cash breakeven level of output

Introduction:

Cash breakeven specifies a sales level which can result in a zero operating cash flow.

Answer 9

b)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the cash breakeven level of output

Introduction:

Cash breakeven specifies a sales level which can result in a zero operating cash flow.

Answer 10

c)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the financial breakeven level of output.

Introduction:

Financial breakeven is a point that occurs at the time when a particular project breaks even on a financial basis. This means that the net present value is zero.

Answer 11

c)

Summary Introduction

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the financial breakeven level of output.

Introduction:

Financial breakeven is a point that occurs at the time when a particular project breaks even on a financial basis. This means that the net present value is zero.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 11.1 - Prob. 11.1ACQ Ch. 11.1 - What are some potential sources of value in a new...Ch. 11.2 - Prob. 11.2ACQ Ch. 11.2 - What are the drawbacks to the various types of...Ch. 11.3 - How are fixed costs similar to sunk costs?Ch. 11.3 - What is net income at the accounting break-even...Ch. 11.3 - Why might a financial manager be interested in the...Ch. 11.4 - If a project breaks even on an accounting basis,...Ch. 11.4 - If a project breaks even on a cash basis, what is...Ch. 11.4 - Prob. 11.4CCQ

Solution Summary: The author determines the internal rate of return, payback period, and net present value of a project based on the accounting break even level of output.

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the cash breakeven level of output

Introduction:

Cash breakeven specifies a sales level which can result in a zero operating cash flow.

Want to see the full answer?

Chapter 11 Solutions

Solution Summary: The author determines the internal rate of return, payback period, and net present value of a project based on the accounting break even level of output.

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the cash breakeven level of output Introduction: Cash breakeven specifies a sales level which can result in a zero operating cash flow.

Want to see the full answer?

Chapter 11 Solutions

To determine: The internal rate of return (IRR) of the project, payback period, and net present value of the project based on the cash breakeven level of output

Introduction:

Cash breakeven specifies a sales level which can result in a zero operating cash flow.