Question

**Consider the following project’s cash
flows:**

**Year End-of-year Cash
Flow**

**–$1,000****-$2,000****$2,000****$1,500**

**A. What is this project’s net present value if the
discount rate is 6 percent?**

**B. What is this project’s internal rate of
return?**

**C. What is this project’s modified internal rate of
return if the reinvestment rate is 5 percent?**

**D. What is this project’s modified internal rate of
return if the reinvestment rate is 6 percent?**

Answer #1

A)

NPV = Sum of PV all cash flow

PV=CF/(1+r)^n

where CF= cash flow

r=6%

n=year in which cash flow occur

Foe n=1

PV=2000/(1+6%)^1=$1886.79

Year | Cash flow | PV of Cash flow |

0 | -1000 | -1000.00 |

1 | 2000 | 1886.79 |

2 | 2000 | 1779.99 |

3 | 1500 | 1259.43 |

NPV | 3926.21 |

B)

At internal rate of return ,NPV =0

Let r be internal rate of return

So NPV=0

-1000/(1+r)^0+2000/(1+r)^1+ 2000/(1+r)^2+ 1500/(1+r)^3 =0

Solving for r we get

**r=187.66%**

**C)**

**Here n=3 years**

reinvestment rate =5%

**FV of Positive cash flow
=2000*(1+5%)^2+2000*(1+5%)^1+1500*(1+5%)^0=$5805**

**PV of Cash outflow=-$1000**

**MIRR=(5805/-(-1000))^(1/3)-1=79.72%**

**D)**

reinvestment rate =6%

**FV of Positive cash flow
=2000*(1+6%)^2+2000*(1+6%)^1+1500*(1+6%)^0=$5867.2**

**PV of Cash outflow=-$1000**

**MIRR=(5867.2/-(-1000))^(1/3)-1=80.36%**

Consider the following cash flows:
End of Quarter
1
2
3
4
5
Cash Flow
$1,700
$1,700
$1,500
$100
$1,700
If the effective annual rate is 17 percent, what is the present
value of the cash flows?
Group of answer choices
$2,855.67
$7,368.50
$6,022.13
$4,460.17

You will be receiving cash flows of: $2,000 today, $2,000 at the
end of year 1, $3,000 at the end of year 3, and $6,000 at the end
of year 5. What is the net present value of these cash flows at an
interest rate of 4%?

Assume the following cash flows for Project A: Year 0
=$(10,000); Year 1 = $4,000; Year 2 = $3,500; Year 3 = $1,500; Year
4 = $3,000; and Year 5 = $1,500. The company’s hurdle rate is
9.00%. For Project A, please calculate: 1) the discounted payback
period; 2) the net present value; 3) the internal rate of return;
and 4) the modified internal rate of return.

Shannon Industries is considering a project which has the
following cash flows:
Year Cash Flow
0 ?
1 $2,000
2 $3,000
3 $3,000
4 $1,500
The project has a payback period of 2 years. The
firm’s cost of capital is 12 percent. What is
the project’s net present value? (round your answer
to the nearest $1.)
a. $ 570
b. $ 730
c. $2,266
d. $2,761
e. $3,766

13) Assume the following cash flows for Project A: Year 0
=$(10,000); Year 1 = $4,000; Year 2 = $3,500; Year 3 = $1,500; Year
4 = $3,000; and Year 5 = $1,500. The company’s hurdle rate is
9.00%. For Project A, please calculate: 1) the discounted payback
period; 2) the net present value; 3) the internal rate of return;
and 4) the modified internal rate of return. (3 points)

Susanne invests $8,000 now and again towards the end of year 3.
She gets a following return for 6 years.
Year
0
1
2
3
4
5
6
Cash Flow
0
1,000
2,000
4,000
4,000
5,000
5,000
Assume Discount rate is 8%, answer the following:
What is the Net Present Value of these cash flows? Should
Susanne make invest in this opportunity?
What is the future value of Net Cash Flow (end of year 6)?
If Susanne had another opportunity...

Mega Dynamics is considering a project that has the following
cash flows:
Year
Project Cash Flow
0
?
1
$2,000
2
3,000
3
3,000
4
1,500
The project has an IRR of 17% . The firm's cost of capital is 11
percent. What is the project's net present value (NPV)?

A project has the following cash
flows:
Project
Year Cash
Flow
0 -$3,233
1 1,000
2 1,000
3 1,000
4 1,000
Its cost of capital is 10 percent. What is the
project’s Net Present Value?

What is the present value of a perpetual stream of cash flows
that pays $1,500 at the end of year one and the annual cash flows
grow at a rate of 3% per year indefinitely, if the appropriate
discount rate is 14%? What if the appropriate discount rate is
12%?
A. If the appropriate discount rate is 14%, the present value
of the growing perpetuity is?
(Round to the nearest cent.)

Consider a project with the following cash flows:
Year 0: Cash flow = $500
Year 1: Cash flow = $0
Year 2: Cash flow = -$500
If the current market rate of interest is 8% per year,
compounded annually, what is the value of this stream of cash flows
expressed in terms of dollars at year 1? (Note: This
does not ask for the value as of year 0, but rather, as of year
1.)
a. $0
b. $250
c. $133...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 13 minutes ago

asked 31 minutes ago

asked 56 minutes ago

asked 58 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago