-10 (similar to)et present value. Lepton Industries has three potential projects, all with an initial cost of $2,100,000. The capital budget for the year will allow Lepton to accept only one of the three projects. Given the discount rate and the futuresh flow of each project in the following table,determine which project Lepton should accept.Which project should Lepton accept? (Select the best response.)O A. Project RO B. Project SO C. None of the projectsO D. Project Q - Xhe best response.)Data Table(Click on the following icon in order to copy its contents intó a spreadsheet.)Project R$700,000$700,0005700,000S700,000$700,000Project S$1,100,000$900,000$700,000$500,000$300,00018%Cash FlowProject QYear 1$500,000Year 2$500,000Year 3$500,000$500,000$500,0009%Year 4Year 5Discount rate11%PrintDone

Select project with highest NPV

present value. Lepton Industries has three potential projects, all with an initial cost of $2,100,000. The capital budget for the year will allow Lepton to accept only one of the three projects. Given the discount rate and the lulure sh flow of each project in the following table, , determine which project Lepton should accept. hich project should Lepton accept? (Select the best response.) DA. Project R O B. Project S O C. None of the projects O D. Project Q

present value. Lepton Industries has three potential projects, all with an initial cost of $2,100,000. The capital budget for the year will allow Lepton to accept only one of the three projects. Given the discount rate and the lulure sh flow of each project in the following table, , determine which project Lepton should accept. hich project should Lepton accept? (Select the best response.) DA. Project R O B. Project S O C. None of the projects O D. Project Q

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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Project X cash flows is given on the timeline below 0. 2. 3 4. Project X -$10,000 $6.500 $3,000 $3.000 $1.000 Calculate Project X NPV if WACC-9% Round your answer to the nearest hundredth, have at least two decimal digits and write it in the Answer field. Would you accept or reject the project (write in the textbox below the answer field)?
Spreadsheet Link What is the IRR of the following project?Cash FlowYear0 -32,0001. 9,0002. 10,0003. 15,0004. 7,800 1). 10.8% 2). 11.2% 3). 11.7%4). 12.0% 5). 12.3%
Spreadsheet Link What is the IRR of the following project? Cash Flow Year 0 32.000 9,000 1. 2 10,000 15,200 7,800 4. 1) 10.8% 2) 11.2% • 3) 11.7% 4) 12.0% 5) 12.3% 234
Choosing between two projects with acceptable payback periods Shell Camping Gear, Inc., is considering two mutually exclusive projects. Each requires an initial investment of $180,000. John Shell, president of the company, has set a maximum payback period of 4 years. The cash inflows associated with each project are shown in the following table: a. Determine the payback period of each project. b. Which project is acceptable based on payback period? C a. The payback period of project A is years. (Round to two decimal places.) The payback period of project B is years. (Round to two decimal places.) b. Which project is acceptable based on payback period? (Select the best answer below.) O Project B would be preferred over project A because the larger cash flows are in the early years of the project. O Project A would be preferred over project B because the larger cash flows are in the later years of the project.
All techniques with NPV profile Mutually exclusive projects Projects A and B, of equal risk, are alternatives for expanding Rosa Company's capacity. The firm's cost of capital is 15%. The cash flows for each project are shown in the following table a. Calculate each project's payback period. b. Calculate the net present value (NPV) for each project. c. Calculate the internal rate of return (IRR) for each project d. Indicate which project you would recommend years (Round to two decimal places.) a. The payback period of project A is The payback period of project B is years (Round to two decimal places.) b. The NPV of project A is $ The NPV of project B is $ c. The IRR of project A is The IRR of project B is 15.24% (Round to the nearest cent.) (Round to the nearest cent.) 15.92%. (Round to two decimal places.) (Round to two decimal places.) پہلے
Look at the cash flows for projects F and G given below. Cash Flows ($) NPV IRR at Project со F G C1 C2 C3 C4 (15,000) 7,200 7,200 7,200 Ө (15,000) 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 17.3 4,206 C5 C6 C7 Cg (%) 10% 0 Ө Ө Ө 20.7 2,905 The cost of capital was assumed to be 10%. Assume that the forecasted cash flows for projects of this type are overstated by 7% on average. That is, the forecast for each cash flow from each project should be reduced by 7%. But a lazy financial manager, unwilling to take the time to argue with the projects' sponsors, instructs them to use a discount rate of 17%. a. What are the projects' true NPVs? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) Project F Project G NPV at 10% b. What are the NPVs at the 17% discount rate? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) Project F Project G NPV at 17%
me IRR-Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table: . The firm's cost of capital is 15%. Options a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRS. b. Which project is preferred? a. The internal rate of return (IRR) of project X is %. (Round to two decimal places.) Is project X acceptable on the basis of IRR? (Select the best answer below.) No O Yes The internal rate of return (IRR) of project Y is %. (Round to two decimal places.) Is project Y acceptable on the basis of IRR? (Select the best answer below.) O Yes Click to select your answer(s). O Type here to search
E Click the icon to view the ne More Info (a) Identity all simple investme DA. Project C B. Project B C. Project D YD. Project A Net Cash Flow Project C $50,000 Project D Project A -$32,000 35,000 25,000 Project B $38,000 $46,300 2,600 6,173 78,345 1 37,000 -26,000 -26,90 -26,006 47.000 (b) Identify all nonsimple investm 15,000 -3,000 DA. Project A VB. Project B OC. Project D OD. Project C Print Done (c) Compute /" for each investment. The rate of return of Project A is 71.1 %. (Round to one decimal place.) The rate of return of Project B is 68.1%. (Round to one decimal place.) The rate of return of Project C is 26 % (Round to one decimal place.)
Consider two mutually exclusive investment alternatives given in the table below. Click the icon to view the cash flows for the projects. (a) Determine the IRR on the incremental investment in the amount of $5,000. (Assume that MARR = 11%.) The rate of return on the incremental investment is%. (Round to two decimal places.)
Look at the cash flows for projects F and G given below. Cash Flows ($) Project Co F G NPV IRR at C4 C6 C7 Cg C1 C2 C3 (6,000) 4,400 4,400 4,400 ( % ) 10% 52.8 4,942 0 0 0 0 (6,000) 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 32.9 5,737 Project F Project G The cost of capital was assumed to be 10%. Assume that the forecasted cash flows for projects of this type are overstated by 8% on average. That is, the forecast for each cash flow from each project should be reduced by 8%. But a lazy financial manager, unwilling to take the time to argue with the projects' sponsors, instructs them to use a discount rate of 18%. a. What are the projects' true NPVs? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) Project F Project G NPV at 10% C5 0 b. What are the NPVs at the 18% discount rate? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) NPV at 18%
All techniques, conflicting rankings Nicholson Roofing Materials, Inc., is considering two mutually exclusive projects, that both cost $130,000. The company's board of directors has set a 4-year payback requirement the cost of capital is 7%. The project cash flows are shown in the following table: a. Calculate the payback period for each project. Rank the projects by payback period. b. Calculate the NPV of each project. Rank the project by NPV. c. Calculate the IRR of each project. Rank the project by IRR. d. Make a recommendation. a. The payback period of project A is 2.89 years. (Round to two decimal places.) The payback period of project B is 1.64 years. (Round to two decimal places.) According to the payback method, which project should the firm choose? (Select the best answer below.) A. Project B B. Project A b. The NPV of project A is $. (Round to the nearest cent.)
You invest $200 000 in a project. Your returns are as follows: Year Annual Net Cash Inflow Cumulative Net Cash Inflow 1 $70 000 $70 000 2 $70 000 $140 000 3 $80 000 $220 000 4 $50 000 $270 000 5 $30 000 $300 000 Calculate your payback period? a. 4 years b. 3.5 years c. 2.25 years d. 2.75

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