Question

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.

Answer #1

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)

Year Project A Expected Cash Flows ($) 0 (1,250,000) 1 75,000 2
218,750 3 535,000 4 775,000 5 775,000 Year Project B Expected Cash
Flows ($) 0 (1,050,000) 1 650,000 2 500,000 3 226,250 4 137,500 5
62,500 Metrics Payback Period (in years) (A)3.54 (B)1.8 Discounted
payback period (in years) (A)4.58 (B)2.72 Net Present Value (NPV)
(A)$160,816 (B)$151,742 Internal Rate of Return (A)18.90% (B)23.84%
Profitability Index (A)1.13 (B)1.14 Modified Internal Rate of
Return (MIRR) (A)17.82% (B)18.15% a). Which of the...

You are analyzing a project and have prepared the following
data:
Year Cash flows
0 -$275,000
1 $ 50,000
2 $ 75,000
3 $ 95,000
4 $ 15,000
Required payback period 3 years
Required rate of return 5%
You are required to:
a) Determine the project’s Profitability Index, Internal Rate of
Return, NPV and Discounted Payback
Period
b) Decide whether to accept the project based on the above
investment decision criteria?

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

Fernando Designs is considering a project that has the
following cash flows and WACC data. What is the project's
discounted payback period? (10 points) What is the project’s
modified internal rate of return?
WACC: 10.00%
Year
0
1
2
3
Cash
flows
-$900
$500
$500 $500

A project has the following total (or net) cash flows.
________________________________________
Year Total (or net)
cash flow
________________________________________
1 $50,000
2 70,000
3 80,000
4 100,000
_______________________________________
The required rate of return on the project is 13 percent. The
initial investment (or initial cost or initial outlay) of the
project is $100,000.
a) Find the (regular) payback period of the project.
b) Compute the discounted payback period of the project.

A project has the following total (or net) cash flows.
________________________________________
Year Total (or net)
cash flow
________________________________________
1 $50,000
2 70,000
3 80,000
4 100,000
_______________________________________
The required rate of return on the project is 13 percent. The
initial investment (or initial cost or initial outlay) of the
project is $100,000.
a) Find the (regular) payback period of the project.
b) Compute the discounted payback period of the project.

Question 4 (Total marks =15)
You are evaluating an investment project, Project XX, with the
following cash flows:
Period Cash Flow
0 -$200,000
1 $65,000
2 $65,000
3 $65,000
4 $65,000
5 -$65,000
Calculate the following:
(a). Payback period ( 2 marks)
(b). Calculate the discounted cash flows for each year, assuming a
10% discount rate.
(c) Discounted payback period, assuming a 10% cost of capital.
(d) .Net present value, assuming a 10% cost of capital.
(e). Profitability index, assuming...

Telesis Corp is considering a project that has the
following cash flows:
Year
Cash Flow
0
-$1,000
1
400
2
300
3
500
4
400
The company’s weighted average cost of capital (WACC) is
10%. What are the project’s payback period (Payback), internal rate
of return (IRR), net present value (NPV), and profitability index
(PI)?
A.
Payback = 3.5, IRR = 10.22%, NPV = $1260, PI=1.26
B.
Payback = 2.6, IRR = 21.22%, NPV = $349, PI=1.35
C.
Payback =...

A project has the following cash flow.
Year
Costs
Benefits
0
$10,000
0
1
$1,000
$5,000
2
$1,000
$5,000
3
$2,000
$6,000
4
$2,0000
$3,000
Assuming a discount rate of 10%, estimate the following:
a)Net Present Value (NPV)
b)Discounted Benefit-Cost Ratio
c)Net discounted Benefit-Cost Ratio
d)Is the project feasible? Explain your answer

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