Project #66569 - 10 Finance Problems

1-  NPV with Normal Cash Flows Compute the NPV for Project M and accept or reject the

 

project with the cash flows shown below if the appropriate cost of capital is 8 percent.  (LG13-3)

 

  Project M

 

Time:     0              1              2              3              4              5

 

Cash flow            - $1,000                $350       $480       $520       $600       $100

 

 2-  NPV with Non-Normal Cash Flows Compute the NPV statistic for Project K and rec-

 

ommend whether the firm should accept or reject the project with the cash flows shown

 

below if the appropriate cost of capital is 6 percent.  (LG13-3)

 

 

3-  Payback Compute the payback statistic for Project B and decide whether the firm should

 

accept or reject the project with the cash flows shown below if the appropriate cost of capi-

 

tal is 12 percent and the maximum allowable payback is three years.  (LG13-2)

 

  Project B

 

Time:     0              1              2              3              4              5

 

Cash flow            - $11,000             $3,350   $4,180   $1,520   $0           $1,000

 

 

 4-  Discounted Payback Compute the discounted payback statistic for Project C and rec-

 

ommend whether the firm should accept or reject the project with the cash flows shown

 

below if the appropriate cost of capital is 8 percent and the maximum allowable discounted

 

payback is three years.  (LG13-2)

 

Project C

 

Time:     0              1              2              3              4              5

 

Cash flow            - $1,000                $480       $480       $520       $300       $100

 

 

 

 

5-  PI Compute the PI statistic for Project Z and advise the firm whether to accept or reject

 

the project with the cash flows shown below if the appropriate cost of capital is 8 percent.

 

 (LG13-6)

 

  Project Z

 

Time:     0              1              2              3              4              5

 

Cash flow            - $1,000                $350       $480       $650       $300       $100

 

 ________

Use this information to answer the next six questions. If a particular decision method should

 

not be used, indicate why.

 

 Suppose your firm is considering investing in a project with the cash flows shown below, that the

 

required rate of return on projects of this risk class is 8 percent, and that the maximum allowable

 

payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively.

 

  Time:   0              1              2              3              4              5              6

 

Cash flow            - $5,000 $1,200 $2,400 $1,600 $1,600 $1,400 $1,200

 

 

 

 6-Payback Use the payback decision rule to evaluate this project; should it be accepted or

 

rejected?  (LG13-2)

 

 

 

7--  IRR Use the IRR decision rule to evaluate this project; should it be accepted or rejected?

 

 (LG13-4)

 

 

 

8-  NPV Use the NPV decision rule to evaluate this project; should it be accepted or rejected?

 

 (LG13-3)

 

 

 

 9-  PI Use the PI decision rule to evaluate this project; should it be accepted or rejected?  (LG6)

 

 

 

10-  PI Use the PI decision rule to evaluate this project; should it be accepted or rejected?

 

 (LG13-6)

 

 

    

Subject Mathematics
Due By (Pacific Time) 04/18/2015 09:00 pm
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