Question

Given an initial investment of $10,000, a hurdle rate of 11% and the following cash flows, find the IRR: Year 1 $2,500 Year 2 $2,500 Year 3 $3,000 Year 4 $3,000 Year 5 $3,500

Based on the IRR in question 8, is it worth the $10,000 investment? Why or why not?

Answer #1

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.

Calculate the present value of the given stream of cash flows
using the given discount rate. The present value you find is
between $24,000 and $24,100.
time
cash flows
discount rate
0
5%
1
$1,000
2
$1,500
3
$2,000
4
$2,500
5
$3,000
6
$3,500
7
$4,000
8
$4,500
9
$5,000
10
$5,500

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)

This question is based on the following cash flows
C0=$10,000
I1=$2,000
I2=$2,000
I3=$3,000
I4=$3,000
I5=$2,500
L=$1,000
0
1
2
3
4
5
C: Cost, I: Income, L: Salvage
The escalation rate is 10% per year in this example.
Calculate the NPV of this investment assuming an escalated
dollar minimum rate of return of 8%

This question is based on the following cash flows
C0=$10,000
I1=$2,000
I2=$2,000
I3=$3,000
I4=$3,000
I5=$2,500
L=$1,000
0
1
2
3
4
5
C: Cost, I: Income, L: Salvage
The escalation rate is 10% per year in this example.
Calculate the NPV of this investment assuming an escalated
dollar minimum rate of return of 8%

An investment cost $10,000 with expected cash flows of
$3,000 a year for 5 years. At what discount rate will the project’s
IRR equal its discount rate?
27.22%
15.24%
0%
16.67%
21.08%

11. The Ogden Corporation makes an Investment of $25,000, which
yields the following cash flows: Year Cash Flow 1 $5,000 2 $5,000 3
$8,000 4 $9,000 5 $10,000 a. What is the present value with a 9
percent discount rate (cost of capita) b. What is the internal rate
of return (IRR)? c. In this problem would you make the same
decision in parts a and b? pls help me with formula.

. Calculate the IRR and NPV for the following cash flows. Assume
a 15% discount rate
Year
Project 1
Cash flow
Project 2
Cash flow
0
-$20,000
-$20,000
1
1,000
12,000
2
3,000
15,000
3
4,000
3,000
4
12,000
4,000
5
15,000
1,000
9. If your tenant pays you rent of $24,000 a year for 10 years,
what is the present value of the series of payments discounted at
10% annually?
10. You are going to invest $300,000 in a...

A capital investment project requires an initial investment of
$100 and generates positive cash flows, $50 and $100, at the end of
the first and second years, respectively. (There is no cash flow
after the second year) The firm uses a hurdle rate of 15% for
projects of similar risk.
Determine whether you should accept or reject the project based
on NPV.
Determine whether you should accept or reject the project based
on IRR.
Determine whether you should accept or...

Present value of annuities and complex cash flows)
You are given three investment alternatives to analyze. The cash
flows from these three investments are as follows:
Assuming an annual discount rate of 20 % find the present value
of each investment.
Investment Alternatives
End of Year
A
B
C
1
$
10,000
$
10,000
2
10,000
3
10,000
4
10,000
5
10,000
$
10,000
6
10,000
50,000
7
10,000
8
10,000
9
10,000
10
10,000
10,000

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