is my response accurate Consider a project with the following cash flows:Year OYear 1Year 2-$2.3 billion$9.2 billion-$7.3 billionHint: Use the Excel function for this problem.Which of the following statements about the IRR for this project is correct? There is/are:only one IRR which is 147.57%two IRRs equal to 19.23% and 147.57%, respectivelytwo IRRs equal to 9.11% and 190.89%, respectivelyonly one IRR which is 19.23%O three IRRs equal to 9.11%, 19.23% and 147.57%, respectively

Here's the reasoning:The Internal Rate of Return (IRR) represents the discount rate that makes the…

Answered: Consider a project with the following…

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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Consider an investment project with the cash flows given in the table below. Compute the IRR for this investment. Is the project acceptable at MARR = 10%? The IRR for this project is %. (Round to one decimal place.) n 0 1 2 3 Cash Flow -$35,000 15,000 14,520 13,990
You've estimated the following cash flows (in $) for two mutually exclusive projects: Year Project A Project B 0 -5,400 -8,100 1 1,325 1,325 2 2,148 2,148 3 3,958 7,725 The required return for both projects is 8%. 1. What is the IRR for project A? 2. What is the IRR for project B? 3. Which project seems better according to the IRR method? 4. What is the NPV for project A? 5. What is the NPV for project B? 6. Which project seems better according to the NPV method? 7. Compare the answers to parts 3 and 6. If both projects are mutually exclusive, which one should you accept?
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$ 15,456 5,225 8,223 13,013 8,705 0 1 234 -$ 276,363 26,400 51,000 57,000 402,000 Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A? Payback period b. What is the payback period for Project B? Payback period c. What is the discounted payback period for Project A? Discounted payback period
A project has the following cash flows: Year Cash Flows 0 $ 128,200 12 1 2 3 4 49,400 63,800 51,600 28,100 The required return is 8.7 percent. What is the profitability index for this project? Multiple Choice 1.142 1.003 .803 1.038
Consider the following cash flows:Year Cash Flow0 -$8,0001 $3,0002 $3,6003 $2,7004 $2,5005 $2,1006 $1,600 1. NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? 2. PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?
Consider projects A and B with the following cash flows: Ce $32 57 $16 +$16 + 32 +$ 16 32 a-1. What is the NPV of each project if the discount rate is 12%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) 6-2. Which project has the higher NPV? b-1. What is the profitability Index of each project? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b-2. Which project has the higher profitablity index? c. Which project is most attractive to a firm that can ralse an unlimited amount of funds to pay for its investment projects? d. Which project is most attractive to a firm that is limited in the funds it can ralse? ok nt mces Project A Project B a-1. NPV of ench project if the discount rate is 12% a-2. Which project has the higher NPV? b-1. Profitability index of each projoct b-2. Which project has the higher protitability index? Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for…
Which of the following comes closest to the net present value (NPV) of a project whose initial investment is $5 and which produces two cash flows: the first at the end of year 2 of $3 and the second at the end of year 4 of $7? The required rate of return is 13%? Select one: a. $1.84 b. $0 c. $1.64 d. $2.05 e. $2.26
You've estimated the following cash flows (in $) for two projects: A B C 1 Year Project A Project B 2 0 -71 -254 3 1 15 50 4 2 21 73 5 3 29 82 6 4 25.2 113.24 The required return is 7% for both projects. 1. What is the IRR for project A? 2. What is the IRR for project B? 3. What is the NPV of project A? 4. What is the NPV of project B? 5. If the projects are mutually exclusive, which project should you choose? Project B, based on the NPV Project A, based on the IRR Project A, based on the NPV Project B, based on the IRR
Living Colour Co. has a project available with the following cash flows: Year Cash Flow 0 −$35,070 1 7,970 2 9,570 3 13,560 4 15,610 5 10,340 If the required return for the project is 7.9 percent, what is the project's NPV?
A project has the following cash flows set out below. What is the profitability index of this project if the relevant discount rate is 2 percent? Enter your final answer to two decimal places. Year Cash flow 0 -1,745 1 537 2 2,066 3 3,912
Use the table for the question(s) below. Consider the following two projects with cash flows in $: Project A B Year 0 Cash Flow - 100 - 73 O A. 17.3%. B. 12.6%. Year 1 Cash Flow O C. 1.7%. O D. 23.3%. 40 30 50 60 30 30 An incremental IRR of Project B over Project A is closest to: Year 2 Cash Flow Year 3 Cash Flow Year 4 Cash Flow N/A 30 Discount Rate .15 .15
A project has the following cash flows: Year Cash Flow 0 $71,500 1 -51,000 28,800 2 a. 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.) b. What is the NPV of this project if the required return is 5 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.) c. What is the NPV of the project if the required return is O 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. What is the NPV of the project if the required return is 23 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.) a. Internal rate of return b. NPV C. NPV d. NPV %

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