Project #62673 - Homework

MUST SHOW ALL ANSWERS AND WORK THEM COMPLETLY OUT. EVERY STEP MUST BE SHOWN.

 

 

Question 1

  1. (1) Ganders Corp. is considering a project that has the following cash flow and required return data. What is the project's NPV? Do you think the company should accept the project?

Required Return:  5.00%

Year

0

1

2

3

Cash flows

-$1,450

$500

$500

$500

 

(2) Harry Company is considering a project that has the following cash flow and required return data. What is the project's NPV?  Do you think the company should accept the project?

Required Return:  10.00%

Year

0

1

2

3

4

5

Cash flows

-$1,600

$600

$590

$580

$570

$560

Question 2

  1. (1) Simonns Systems is considering a project that has the following cash flow data. What is the project's IRR? Would the company accept or reject the project based on the IRR if its required rate of return is 7.5 percent?

Year

0

1

2

3

Cash flows

-$1,750

$650

$650

$650

 

 

 

 

(2) Simtuns Golf Inc. is considering a project that has the following cash flow data.  What is the project's IRR?  If the required return on the project is 10 percent, would the company accept the project?

 

Year

0

1

2

3

4

Cash flows

-$1,050

$400

$390

$280

$170

 

Question 3

  1. (1) Skymel Inc. is considering a project that has the following cash flow data.  What is the project's payback? Should the company accept or reject the project if the required payback period (i.e., cut-off time period) is 2 years?

Year

0

1

2

3

Cash flows

-$325

$150

$200

$300

 

  1. (2) Skyumeal Inc. is considering a project that has the following cash flow data.  What is the project's discounted payback if the required rate of return for the project is 10 percent? Should the company accept or reject the project if the required discounted payback period (i.e., cut-off time period) is 1 year?

Year

0

1

2

3

Cash flows

-$325

$150

$200

$300

 

Question 4

  1. (1) Deman Systems is considering a project that has the following cash flow and required return data.  What is the project's MIRR? Would you accept or reject the project?

Required return:  10.00%

Year

0

1

2

3

Cash flows

-$1,000

$450

$450

$450

 

(2) Harry Company is considering a project that has the following cash flow and required return data. What is the project's profitability index (PI)?  Do you think the company should accept the project?

Required Return:  10.00%

Year

0

1

2

3

4

5

Cash flows

-$1,600

$600

$590

$580

$570

$560

 

Question 5

  1. A firm is considering Projects S and L, whose cash flows are shown below.  These projects are mutually exclusive, equally risky, and not repeatable.  The CEO wants to use the IRR criterion, while the CFO favors the NPV method.  You were hired to advise the firm on the best procedure. Compute the IRRs and NPVs for each project. If the wrong decision criterion is used, how much potential value would the firm lose?

Required return: 6.00%

Year

0

1

2

3

4

Cash flows of Project S

-$1,055

$400

$400

$400

$400

Cash flows of Project L

-$2,050

$700

$700

$700

$700

 

 

Subject Business
Due By (Pacific Time) 03/20/2015 12:00 pm
Report DMCA
TutorRating
pallavi

Chat Now!

out of 1971 reviews
More..
amosmm

Chat Now!

out of 766 reviews
More..
PhyzKyd

Chat Now!

out of 1164 reviews
More..
rajdeep77

Chat Now!

out of 721 reviews
More..
sctys

Chat Now!

out of 1600 reviews
More..
sharadgreen

Chat Now!

out of 770 reviews
More..
topnotcher

Chat Now!

out of 766 reviews
More..
XXXIAO

Chat Now!

out of 680 reviews
More..
All Rights Reserved. Copyright by AceMyHW.com - Copyright Policy