Calculate IRRs for the projects in the previous problem. In previous problem Initial Outlay (Co) (in years)
Question:
Calculate IRRs for the projects in the previous problem.
In previous problem
Initial Outlay (Co) (in years) Cash Flow Capital ($100,000) ($200,000) ($300,000) Project Length Annual Cost of NPV S35,000 890 $35,000 $15,000 $20,000 $25,000 4 13% $50,000 $56,098 S75,000 D ($400,000) 9% 10%
Step by Step Answer:
At the IRR the present value of the cash inflows is equa...View the full answer
Related Video
NPV stands for \"Net Present Value,\" which is a financial concept used to determine the value of an investment or project. It measures the difference between the present value of cash inflows and the present value of cash outflows over a given period of time, using a specific discount rate. To calculate the NPV of an investment, you need to first estimate the cash inflows and outflows associated with the investment, and then discount them back to their present values using a discount rate. The discount rate represents the cost of capital or the expected rate of return required by investors. The formula for calculating NPV is: NPV = sum of (cash inflows / (1 + discount rate)^t) - sum of (cash outflows / (1 + discount rate)^t) Where: Cash inflows: the expected cash received from the investment Cash outflows: the expected cash paid out for the investment Discount rate: the required rate of return or the cost of capital t: the time period in which the cash flow occurs If the NPV is positive, it means that the investment is expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a good investment. If the NPV is negative, it means that the investment is not expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a bad investment.
Students also viewed these Finance questions
-
Calculate IRRs for the projects in the previous problem.
-
Calculate the internal rates of return for the projects in Problem 10.14. Problem 10.14 A firm uses a discount rate of 12% for all its investment projects. Faced with the following choice of...
-
Consider projects A and B: Calculate IRRs for A and B. Which project does the IRR rule suggest is best? Which project is really best? Cash Flows (dollars) C1 -30,000 21,000 21,000 +$6,446 -50,000...
-
Outline the traditional problems associated with the flat- file model that are resolved by the database model.
-
Using the following ANOVA table based on data in Problem 6 of Chapter 8 about the regression relationship of respiratory cancer mortality rates (Y) to air pollution index (X1), mean age (X2), and...
-
What were some of the causes of the stagflations of 1973 and 1979? In what ways were these episodes of stagflation different from the Great Depression of the 1930s?
-
P(x > 18) Write the binomial probability in words. Then, use a continuity correction to convert the binomial probability to a normal distribution probability.
-
The following information was available to reconcile Montrose Company's book balance of Cash with its bank statement balance as of October 31, 2014: a. After all posting was completed on October 31,...
-
What's Your Understanding of Governance to Deliver Long-term Value and Performance? How can a governance and accountability framework can help to develop long-term value for the company and ensure it...
-
Mrs. Rusholme engaged the firm of Saunders and Watts Ltd. to refinish floors in certain rooms of a home owned by her and her husband in Red Deer, Alberta. She told Mr. Saunders that she and her...
-
Callaway Associates, Inc. is considering the following mutually exclusive projects. Callaways Cost of capital is 12%. a. Calculate each projects NPV and IRR. b. Which project should be undertaken?...
-
Find the MIRR and the IRR for the following capital budgeting project and comment on the difference between the two. The cost of capital is 12%. Year: 0 ($800) $550 ($150) $700
-
Knowing that the angular velocity of link AB is AB = 4 rad/s, determine the velocity of the collar at C and the angular velocity of link CB at the instant shown. Link CB is horizontal at this...
-
Show that \[\sum_{n=0}^{N-1} W_{N}^{n k}= \begin{cases}N, & \text { for } k=0, \pm N, \pm 2 N, \ldots \\ 0, & \text { otherwise }\end{cases}\]
-
Show that the PSD function of a WSS random process \(\{X\}\) satisfies the following properties: (a) \(\Gamma_{X}(0)=\sum_{v=-\infty}^{\infty} R_{X}(v)\). (b) It is an even function; that is:...
-
Prove that \[\begin{equation*}\mathcal{F}^{-1}\left\{\sum_{k=-\infty}^{\infty} \delta\left(\omega-\frac{2 \pi}{N} k ight) ight\}=\frac{N}{2 \pi} \sum_{p=-\infty}^{\infty} \delta(n-N p) \tag{2.262}...
-
Compute and plot the magnitude and phase of the DFT of the following finite-length sequences: (a) \(x(n)=2 \cos \left(\pi \frac{n}{N} ight)+\sin ^{2}\left(\pi \frac{n}{N} ight)\), for \(0 \leq n \leq...
-
Compute the coefficients of the Fourier series of the periodic sequences below using the DFT. (a) \(x^{\prime}(n)=\sin \left(2 \pi \frac{n}{N} ight)\), for \(N=20\). (b)...
-
None but great novels are timeless, and The Brothers Karamazov is a great novel. In the following enthymemes, determine whether the missing statement is a premise or a conclusion. Then supply the...
-
Establish identity. cos( + k) = (-1)k cos , k any integer
-
A centrifugal fan operating in a duct has the dimensionless parameters \[ C_{Q}=\frac{Q}{\omega D^{3}} \quad \text { and } \quad C_{H}=\frac{\Delta p}{ho \omega^{2} D^{2}} \] where \(C_{Q}\) is a...
-
Explain the nature of the potential lending losses associated with each of the following: default risk, liquidity risk, and maturity risk.
-
Do all loans have default, liquidity, and maturity risk more or less equally? Are some types of loans relatively free of some risks? Is the debt of a particular organization free of certain risks? If...
-
Explain the ideas of a risk-free rate and the real rate of interest. Is either of them approximated by anything that exists in the real world?
-
Lake Incorporated and the River, Incorporated reported net incomes of $205,000 and $164,000, respectively, for the most recent fiscal year. Both companies had 41,000 shares of common stock issued and...
-
What effect Eventually, BREXIT will make on EU? How it will benefit UK? What will be the possible outcome?
-
Merchant Company purchased property for a building site. The costs associated with the property were: Purchase price Real estate commissions Legal fees Expenses of clearing the land Expenses to...
Study smarter with the SolutionInn App