UPENN: LOOSE LEAF CORP.FIN W/CONNECT
17th Edition
ISBN: 9781260361278
Author: Ross
Publisher: McGraw-Hill Publishing Co.
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Textbook Question
Chapter 5, Problem 22QP
Multiple IRRs This problem is useful for testing the ability of financial calculators and computer software. Consider the following cash flows. How many different IRRs are there? (Hint: Search between 20 percent and 70 percent.) When should we take this project?
| Year | Cash Flow |
| 0 | -$ 2,016 |
| 1 | 11 ,448 |
| 2 | - 24.280 |
| 3 | 22,800 |
| 4 | -8,000 |
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Students have asked these similar questions
NPV profile of a project. Given the following cash flow of Project L-2, draw the NPV profile. Hint: Be sure to use a
discount rate of zero for one intercept (y-axis) and solve for the IRR for the other intercept (x-axis).
(Click on the following icon in order to copy its contents into a spreadsheet.)
Year 0 = - $300,000
Year 1= $42,000
Year 2 = $77,000
Year 3 = $111,000
Year 4 = $140,000
What is the NPV of Project L-2 where zero is the discount rate?
$ 70000.00 (Round to the nearest dollar.)
What is the IRR of Project L-2?
% (Round to two decimal places.)
Consider the following:
Year Cash Flow
0 -$8,000
1
$200
2
$400
3
?
4
$500
5
$700
The required rate of return is 8%. Find the minimum amount you
would have to receive as a cash flow in year 3 and still
recommend the project. Answer to 2 decimals places.
8,349.32
HOMEWORK #1
Question 1.
information is known about the project, some rough estimates have been gathered. Following table is
prepared to show the cash inflow and outflow for the following years:
A project manager is working on justification of a project. Since very little
Year
Cash In Flow
Cash Out Flow
700
500
190
700
200
3.
300
150
400
100
What is the payback period for this project?
Question 2.
Use NPV.
If the required rate of return is 10%, is the project mentioned above acceptable?
Question 3.
Calculate profitability index to determine if the project acceptable. Use 10%
interest rate.
NOTE: Show the calculations for the question 1,2,and 3 and fill in the table below.
Cash In Cash Out
Net cash
Year
Cum Cash Flov
Discounted Cash Flo
Flow
Flow
flow
700
1.
500
190
700
300
2
200
3
150
4
400
100
Discounted Cash Flow (NPV)
Net Cash In Flow
Net Cash Out Flow
Profitability Index
Payback Period
Chapter 5 Solutions
UPENN: LOOSE LEAF CORP.FIN W/CONNECT
Ch. 5 - Payback Period and Net Present Value If a project...Ch. 5 - Net Present Value Suppose a project has...Ch. 5 - Comparing Investment Criteria Define each of the...Ch. 5 - Payback and Internal Rate of Return A project has...Ch. 5 - International Investment Projects In March 2014,...Ch. 5 - Capital Budgeting Problems What are some of the...Ch. 5 - Prob. 7CQCh. 5 - Prob. 8CQCh. 5 - Net Present Value versus Profitability Index...Ch. 5 - Internal Rate of Return Projects A and B have the...
Ch. 5 - Net Present Value You are evaluating Project A and...Ch. 5 - Modified Internal Rate of Return One of the less...Ch. 5 - Net Present Value It is sometimes stated that the...Ch. 5 - Prob. 14CQCh. 5 - Calculating Payback Period and NPV Maxwell...Ch. 5 - Calculating Payback An investment project provides...Ch. 5 - Calculating Discounted Payback An investment...Ch. 5 - Calculating Discounted Payback An investment...Ch. 5 - Prob. 5QPCh. 5 - Calculating IRR Compute the internal rate of...Ch. 5 - Calculating Profitability Index Bill plans to open...Ch. 5 - Calculating Profitability Index Suppose the...Ch. 5 - Cash Flow Intuition A project has an initial cost...Ch. 5 - Prob. 10QPCh. 5 - NPV versus IRR Consider the following cash flows...Ch. 5 - Problems with Profitability Index The Coris...Ch. 5 - Prob. 13QPCh. 5 - Comparing Investment Criteria Wii Brothers, a game...Ch. 5 - Profitability Index versus NPV Hanmi Group, a...Ch. 5 - Comparing Investment Criteria Consider the...Ch. 5 - Comparing Investment Criteria The treasurer of...Ch. 5 - Comparing Investment Criteria Consider the...Ch. 5 - Prob. 19QPCh. 5 - NPV and Multiple IRRs You are evaluating a project...Ch. 5 - Payback and NPV An investment under consideration...Ch. 5 - Multiple IRRs This problem is useful for testing...Ch. 5 - NPV Valuation The Yurdone Corporation wants to set...Ch. 5 - Calculating IRR The Utah Mining Corporation is set...Ch. 5 - Prob. 25QPCh. 5 - Calculating IRR Consider two streams of cash...Ch. 5 - Calculating Incremental Cash Flows Darin Clay, the...Ch. 5 - Prob. 28QPCh. 5 - Prob. 1MCCh. 5 - Seth Bullock, the owner of Bullock Gold Mining, is...
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