Consider the following two projects:ProjectYear 0Cash Flow- 100- 73A50B30The net present value (NPV) of project A is closest toOA. 22.9B. 18.3Year 1Year 2Year 3Cash Flow Cash Flow Cash FlowC. 45.7D. 20.140306030Year 4Cash FlowN/A30DiscountRate0.120.12

The net present value(NPV) of the project is calculated using following equationWhere, CF0 is the…

Answered: Consider the following two projects:…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider the following two projects: Project Year o Year 1 Year 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Rate A - 100 40 50 60 N/A 0.1 в - 73 30 30 30 30 0.1 The net present value (NPV) of project B is closest to: O A. 24.3 O B. 55.2 O C. 27.6 O D. 22.1
Consider the following two projects: Year 0 Project Cash Flow - 100 - 73 Discount Rate A 50 60 .15 B 30 30 .15 The maximum number of incremental IRRs that could exist for project B over project A is: Year 1 Cash Flow O A. 2 OB. 3 O C. 1 OD. O Year 2 Cash Flow 40 30 Year 3 Cash Flow Year 4 Cash Flow N/A 30 ...
Consider the following two projects: Project Year 0 Year 1 Year 2 Cash Flow Cash Flow Cash Flow A B - 100 -73 40 30 30 The profitability index for project B is closest to: OA. 25.99 B. 0.1 O C. 17.33 O D. 0.17 50 Year 3 Cash Flow 60 30 Year 4 Cash Flow N/A 30 Discount Rate 0.15 0.15
Consider the following two projects: Project Year 0 Year 1 Cash Flow Cash Flow A B - 100 -73 40 30 OA. 2.7 years OB. 2 years OC. 2.3 years D. 2.5 years Year 2 Cash Flow 50 30 The payback period for project A is closest to Year 3 Cash Flow 40 30 *** Year 4 Cash Flow N/A 30 Discount Rate 0.1 0.1
4. Consider the two projects depicted in Table 2: The net present value (NPV) of project A is ________ TABLE 2 Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow. Cash Flow. Rate A. -100. 40. 70 60 0. 0.11 B -80 50 30 30 30 0.11 5 Consider the two projects depicted in Table 2: The net present value (NPV) of project B is ________.
Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Rate A – 100 40 50 60 N/A 0.1 В - 73 30 30 30 30 0.1 The net present value (NPV) of project B is closest to: А. 24.3 В. 55.2 С. 27.6 D. 22.1
Question The following economical indictors are referring to types of project (A and B). Answer the following points according to these given indictors in the tables. project A:r=8% project B: r=8% year cash flow (CF) year cash flow (CF) 0 -598 0 -384 1 110 1 105 2 170 2 105 3 210 3 95 4 320 4 118 A) If you are aware that( r%) percentages are various for different reasons to be (10% and 20%). So determine level of NPV during your analysis procedures for whole the mentioned cases of (% r) for each project? B) Which one of the mentioned project are more economically by using concept of IRR and take the range of (% r) between (9% to %25) for supporting your answers? C) Drawing out all the levels of various of the project for each cases of (r %) which given initially in point (A) above. D) Give clear justification about any of the above project more feasible?
Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Rate A B -100 -73 40 30 50 50 N/A 0.11 30 30 30 0.11 The payback period for project A is closest to A. 2.4 years B. 2.2 years ○ C. 2 years OD. 2.6 years
Use the table for the question(s) below. Consider the following two projects: Year 0 Project Cash Flow A - 100 40 50 B - 73 30 30 The payback period for project A is closest to: OA. 2.0 years O B. 2.4 years C. 2.2 years O D. 2.5 years Year 1 Cash Flow Year 2 Cash Flow Year 3 Cash Flow 60 30 Year 4 Cash Flow N/A 30 Discount Rate .15 .15
a) b) Consider the following two projects: Project A B Year 0 Cash Flow -100 -73 17.3% C. d. Year 1 Cash Flow 40 30 a. 30 percent. b. 20 percent. 0 percent. 10 percent. Year 2 Cash Flow What is the incremental IRR of Project B over Project A? a. 12.6% b. 23.3% C. 1.7% d. 50 30 Year 3 Cash Flow 60 30 Year 4 Cash Flow N/A 30 Discount Rate If the standard deviation of returns on the market is 20 percent, and the beta of a well- diversified portfolio is 1.5, calculate the standard deviation of this portfolio. .15 .15
+ Consider the following three mutually exclusive projects: Cash flow - Project A Year 0 1 2 3 4 5 IRR PV of all positive cash flows - use Excel function NPV NPV Best project using IRR decision rule Best project using NPV decision rule Best project using both decision rules -187 500 25 000 70 000 70 000 70 000 30 000 Cash flow- Project B -45 000 17 000 11 000 17 000 11 000 17 000 Cash flow - Project C -128 000 27 000 37 000 47 000 57 000 31 000 a) Calculate the IRR of each of these projects. Using the IRR decision rule, which project should the company accept? b) If the required rate of return is 13%, calculate the NPV of each of these projects. Which project will the company choose if it applies the NPV decision rule? c) Based on your answers in a) and b) Which project the company will finally choose?
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 -$ 15,900 -$ 15,900 1 6,710 7,290 2 7,290 7,730 3 4,810 3,630 a. What is the IRR of Project X? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decim b. What is the IRR of Project Y? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decim c. What is the crossover rate for these two projects? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decim a. IRR b. IRR % % c. Crossover rate %

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Consider the following two projects: Year 0 Year 1 Year 2 Year 3 Cash Flow Cash Flow Cash Flow Cash Flow Project A B 30 The net present value (NPV) of project A is closest to O A. 22.9 O B. 18.3 C. 45.7 D. 20.1 - 100 - 73 40 30 50 60 30 Year 4 Cash Flow N/A 30 Discount Rate 0.12 0.12