q1 5.10 Consider the following sets of investment projects, all of which have a three-yearinvestment life:PeriodProject's Cash Flow(n)ABCD- $12,500-11,00012,500- 13,00015,400-3,000-7,0005,500214,40021,000-2,0005,50037,20013,0004,0008,500(a) Compute the net present worth of each project at i = 15%.(b) Compute the net future worth of each project at iWhich project or projects are acceptable?15%.

The net present value is the excess of present value of cash inflows over the present value of cash…

5.10 Consider the following sets of investment projects, all of which have a three-year investment life: Period Project's Cash Flow (n) A В C D -$12,500 -11,000 12,500 - 13,000 1 5,400 -3,000 -7,000 5,500 14,400 21,000 -2,000 5,500 3 7,200 13,000 4,000 8,500 (a) Compute the net present worth of each project at i = 15%. (b) Compute the net future worth of each project at i = 15%. Which project or projects are acceptable?

5.10 Consider the following sets of investment projects, all of which have a three-year investment life: Period Project's Cash Flow (n) A В C D -$12,500 -11,000 12,500 - 13,000 1 5,400 -3,000 -7,000 5,500 14,400 21,000 -2,000 5,500 3 7,200 13,000 4,000 8,500 (a) Compute the net present worth of each project at i = 15%. (b) Compute the net future worth of each project at i = 15%. Which project or projects are acceptable?

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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You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y - $20,000 - $20,000 12,630 7,470 5,660 7,470 3 6,360 7,470 4 1,920 7,470 1, 2.
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6. Wainright Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 720 2 930 3 1,190 4 1,275 If the discount rate is 10 percent, what is the present value of these cash flows? Present value $ What is the present value at 18 percent? Present value $ What is the present value at 24 percent? Present value $
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A Project with a net investment of $10,000 and net cash flows of $5,000, $4,000, $3,000, $2,000, $1,000 for years 1 through 5 has an internal rate of return of __________ percent. a. 20.27 b. 19.5 c. 18.45 d. 23.5
1- Information about the investment project is as follows. Discount rate (r) = 20% Year Net Cash Flows (TL) -10.000.000 1 - 6.000.000 - 2.000.000 3 30.000.000 4 40.000.000 a) A) Calculate the net present value of the investment. Please interpret with the reasons whether the investment project will be accepted or not according to your result. b) Calculate the internal rate of return of the project using the adjusted internal rate of return method. Interpret the result you found. Explain why the adjusted internal rate of return method was used for the solution. Show the equation you created. You can reach the result by using the excel function. c) Calculate the profitability index of the investment and interpret your result.
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