Duo Corporation is evaluating a project with the following cash flows: Year O 1 2345 2 Cash Flow -$ 28,000 10,200 12,900 14,800 11,900 -8,400 The company uses an interest rate of 9 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do r intermediate calculations and enter your answer as a percent roun decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not intermediate calculations and enter your answer as a percent rounded to decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not r intermediate calculations and enter your answer as a percent rounded to decimal places, e.g., 32.16.)

Duo Corporation is evaluating a project with the following cash flows: Year O 1 2345 2 Cash Flow -$ 28,000 10,200 12,900 14,800 11,900 -8,400 The company uses an interest rate of 9 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do r intermediate calculations and enter your answer as a percent roun decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not intermediate calculations and enter your answer as a percent rounded to decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not r intermediate calculations and enter your answer as a percent rounded to decimal places, e.g., 32.16.)

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

See similar textbooks

Similar questions

QUESTION 6 Seaborn Co. has identified an investment project with the following cash flows. Year Cash Flow $950 1,050 1,320 1,200 1 2 3 4 If the discount rate is 10 percent, what is the present value of these cash flows? 3542.76 3578.84 3418.66 4470.00 3847.03 Click Save and Submit to save and submit. Click Save All Answers to save all answers. SEP 28 30 tv ♫ A
Problem 12-17 (Algo) Net present value and internal rate of return methods [LO12-4] The Hudson Corporation makes an investment of $37,120 that provides the following cash flow: Year 1 2 3 Cash Flow $ 18,000 18,000 12,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What is the net present value at a discount rate of 10 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places. Net present value b. What is the internal rate of return? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return % c. Would you make the same decision under both parts a and b? Yes ○ No
Question 17 The net cash flows for two projects, A and B, are as follows: Year o 3 -220000 -5000 122000 130000 -60000 -10000 -120000 200000 1 2 A Given a discount rate of 4.5%: Blank 1: Calculate the net present value of project A. Blank 2: Estimate the IRR of project A. Write your answer as a percent %. If your answer has a decimal, round to 2 places. Blank # 1 Blank # 2
24 es Year 01234 a. What is the IRR of this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.) IRR Cash Flows $9,800 -4,300 -3,300 -2,500 -2,300 b. If the appropriate discount rate is 10 percent, should you accept this project? O Reject O Accept c. If the appropriate discount rate is 20 percent, should you accept this project? O Reject O Accept d-1. What is the NPV of the project if the appropriate discount rate is 10 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d-2. What is the NPV of the project if the appropriate discount rate is 20 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d-1. NPV d-2. NPV
Year 0123 Cash Flow -$ 27,000 11,000 14,000 10,000 The appropriate discount rate is 16 percent. What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR % Should the firm accept the project? O Reject O Accept
ems with IRR Suppose you are offered a project with the following cash flows: Year Cash Flows 0 $ 8,900 1 -4,600 2 -3,300 3 -2,400 4 -1,700 a. What is the IRR of this offer? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR % b. If the appropriate discount rate is 11 percent, should you accept this offer? O Reject Accept c. If the appropriate discount rate is 23 Sercent, should you accept this offer? 3 Percent, should you accept this offer? O Accept O Reject d-1. What is the NPV of the offer if the appropriate discount rate is 11 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d-2. What is the NPV of the offer if the appropriate discount rate is 23 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
-23 d Duo Corporation is evaluating a project with the following cash flows. The company uses a discount rate of 12 percent and a reinvestment rate of 9 percent on all of its projects. Year 0 1 2 3 Cash Flow -$ 16,600 7,700 8,900 8,500 7,300 -4,700 Calculate the MIRR of the project using all three methods with these interest rates. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Discounting approach Reinvestment approach Combination approach % %
41 A project has the following cash flows: Year Cash Flows 0 -$ 12,400 5,530 7,990 5,360 -1,500 Assuming the appropriate interest rate is 10 percent, what is the MIRR for this project using the discounting approach? 1234 2 3 4
16. Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? WACC: 10.00% Year 1 2 3 4 Cash flows -$900 $525 $485 $445 $405 а. 2.17 уears b. 1.63 years с. 2.07 years d. 1.71 years е. 2.33 years
Problem 7: NPV versus IRR. Consider the following two mutually exclusive projects: Year Cash flow Cash flow (X) (Y) O 1 2 3 -9500 5800 4000 4000 PART 7A: The NPV for X is $ Answer: 2083.77 -9500 3500 5000 6000 if the required rate of return is 10%.
Exercise 14A-1 (Algo) Basic Present Value Concepts [LO14-7] Annual cash inflows that will arise from two competing investment projects are given below: Year Investment A Investment B 1 $ 7,000 $ 10,000 2 8,000 9,000 3 9,000 8,000 4 10,000 7,000 $ 34,000 $ 34,000 The discount rate is 5%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: Compute the present value of the cash inflows for each investment.
Question 4 BAG Corporation is considering the following two projects; namely Project X and Project Y: Project X Cash Flow ($) Cash Flow ($) -80,000 Project Y Year 0 -100,000 10,000 20,000 60,000 40,000 30,000 60,000 Year 1 Year 2 Year 3 5,000 Year 4 60,000 The discount rate for Project X is 9%, and the discount rate for Project Y is 10%. a) i. Calculate the payback period for each project. ii. Suppose Project X and Project Y are mutually exclusive (you can choose either one of Project X and Project Y, but cannot choose both), which project(s) should be accepted if BAG Corporation requires a payback period of 3 years? i. Calculate the profitability index for each project. b) ii. Suppose Project X and Project Y are mutually exclusive, which project(s) should be accepted when the profitability index rule is considered? c) i. Calculate the net present value (NPV) for each project. ii. Suppose Project X and Project Y are mutually exclusive, which project(s) should be accepted when the NPV…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS