The NPV to identify whether the company should accept the project. Introduction: The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

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Answer 1

Question

Chapter 8, Problem 12QP

a)

Summary Introduction

To calculate: The NPV to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

b)

Summary Introduction

To calculate: The IRR to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

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Students have asked these similar questions

Howell Petroleum inc, is trying to evaluate a generation project with the following cash flows: Year 0: -52,000,000 Year 1: 74,000,000 Year2: -12,000,000 If the project rate of return is 12% on its investments, should it accept this project? Why? Compute the IRR for this project. How many IRR are there? Using the IRR decision rule, should the company accept the project? What’s going on here?

Rockmont Recreation Inc. is considering a project that has the following cash flow and WACC data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC, in which case it will be rejected. WACC-10%, Cash Flow Year 0 -1000, Cash Flow Year 1 = $450, Cash Flow Year 2 = $440, Cash Flow Year 3 = $430. 15.41% 15.55% 15.76% 16.13%

A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 28,900 1 12,900 2 15,900 3 11,900 What is the NPV for the project if the required return is 11 percent? At a required return of 11 percent, should the firm accept this project? What is the NPV for the project if the required return is 25 percent?

Answer 2

Question

Chapter 8, Problem 12QP

a)

Summary Introduction

To calculate: The NPV to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

b)

Summary Introduction

To calculate: The IRR to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

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Answer 3

Question

Chapter 8, Problem 12QP

a)

Summary Introduction

To calculate: The NPV to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

b)

Summary Introduction

To calculate: The IRR to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

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Answer 4

Question

Chapter 8, Problem 12QP

a)

Summary Introduction

To calculate: The NPV to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

b)

Summary Introduction

To calculate: The IRR to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

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Answer 5

Chapter 8, Problem 12QP

a)

Summary Introduction

To calculate: The NPV to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

b)

Summary Introduction

To calculate: The IRR to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Answer 6

Chapter 8, Problem 12QP

a)

Summary Introduction

To calculate: The NPV to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Answer 7

Chapter 8, Problem 12QP

a)

Summary Introduction

To calculate: The NPV to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Answer 8

b)

Summary Introduction

To calculate: The IRR to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Answer 9

b)

Summary Introduction

To calculate: The IRR to identify whether the company should accept the project.

Introduction:

The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment. The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 8.1 - Prob. 8.1ACQ Ch. 8.1 - Prob. 8.1BCQ Ch. 8.2 - Prob. 8.2ACQ Ch. 8.2 - Prob. 8.2BCQ Ch. 8.3 - Prob. 8.3ACQ Ch. 8.3 - What are the weaknesses of the AAR rule?Ch. 8.4 - Prob. 8.4ACQ Ch. 8.4 - Prob. 8.4BCQ Ch. 8.5 - What does the profitability index measure?Ch. 8.5 - Prob. 8.5BCQ

Solution Summary: The author explains that the NPV is the difference between the present values of the cash inflows and present value of cash outflow.

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Chapter 8 Solutions