Question
In: Finance
NPV & IRR: Find the NPV (assume 8% just to calculate NPV initially) & IRR of...
NPV & IRR:
Find the NPV (assume 8% just to calculate NPV initially) & IRR of these projects. When would you choose one over the other (i.e. what is the crossover rate)? Draw the NPV profile using 11 intervals of interest rates ranging from (and including) 0% to 100%. Place all data, ratios, calculations, findings, etc. in the first Excel sheet with references to the information in other sheets.
|
Time |
A CF |
B CF |
|
0 |
-10000 |
-10000 |
|
1 |
12000 |
9000 |
|
2 |
6000 |
7000 |
|
3 |
12000 |
5000 |
|
4 |
-6000 |
3000 |
Solutions
Expert Solution
| NPV | A | B |
| 0% | 14000.00 | 14000.00 |
| 10% | 10785.47 | 9772.56 |
| 20% | 8217.59 | 6701.39 |
| 30% | 6142.29 | 4391.30 |
| 40% | 4443.98 | 2603.08 |
| 50% | 3037.04 | 1185.19 |
| 60% | 1857.91 | 37.84 |
| 70% | 859.07 | -906.84 |
| 80% | 4.57 | -1696.39 |
| 90% | -733.04 | -2364.93 |
| 100% | -1375.00 | -2937.50 |
| IRR | 80.06% | 60.37% |
jeff jeffy answered 2 years agoRelated Solutions
Problem 10-8 Calculate the NPV at 8% and the IRR for the following projects. Round the...
Problem 10-8
Calculate the NPV at 8% and the IRR for the following projects.
Round the answers to two decimal places. Use a minus sign to
indicate a negative NPV.
An initial outlay of $69,724 and an inflow of $15,000 followed
by four consecutive inflows of $17,000. Do not round intermediate
calculations. Round PVF and PVFA values in intermediate
calculations to four decimal places.
NPV
$
IRR
%
An initial outlay of $25,424 followed by two zero cash years
and...
6 You have the following cash flows: FIND the IRR, NPV (using 8 %), and the...
6 You have the following cash flows: FIND the IRR, NPV (using 8
%), and the Profitability Index (Bang for your buck)
T0 = -1250 IRR = _______________%_
T1 = 350 NPV = __$______________
T2 = 450 PI = __$______________
T3 = 450
T4 = 550
Find out the NPV, IRR and Payback period for each of the following three projects. Assume...
Find out the NPV, IRR and Payback period for each of the
following three projects.
Assume I=6%.
(60 points)
Project
CF0
CF1
CF2
CF3
CF4
CF5
A
-12,000
3000
3000
4000
4000
1000
B
-12,000
4000
4000
3000
3000
1000
C
-12,000
3000
3000
3000
3000
1000
D
-12,000
5000
3000
5000
3000
0
E
-12,000
3000
3000
3000
3000
5000
F
-12,000
0
0
6000
6000
6000
Find out the NPV, IRR and Payback period for each of the following three projects. Assume...
Find out the NPV, IRR and Payback period for each of the
following three projects.
Assume I=6%. Please show work and
write out answers. Do not put into a table. Thank you
Project
CF0
CF1
CF2
CF3
CF4
CF5
A
-12,000
3000
3000
4000
4000
1000
B
-12,000
4000
4000
3000
3000
1000
C
-12,000
3000
3000
3000
3000
1000
D
-12,000
5000
3000
5000
3000
0
E
-12,000
3000
3000
3000
3000
5000
F
-12,000
0
0
6000...
These are the cash flows for two projects. Calculate the NPV and IRR for both. Then...
These are the cash flows for two projects. Calculate the NPV and
IRR for both. Then select the best project according to the NPV
measure. Use a WACC of 10% for both projects. The investments are 7
for project 1, and 8 for project 2.
Cash flows for project 1
year
1
2
3
4
cash
4
6
2
4
Cash flows for project 2
year
1
2
3
4
cash
3
2
7
4
Calculate the NPV for project...
Calculate the NPV at 9% and the IRR for the following projects: An initial outlay of...
Calculate the NPV at 9% and the IRR for the following projects:
An initial outlay of $69,724 and an inflow of 15,000 followed by
four consecutive inflows of $17,000
Problem #4 Calculate NPV, Payback, Discounted Payback, IRR and Modified IRR for the following project Initial...
Problem #4
Calculate NPV, Payback, Discounted Payback, IRR and Modified IRR
for the following project
Initial Investment: -100,000
Annual project cash flow 22,000 for 6 years
Cost of capital is 6%
Assume the following CFs, what is the PV, the NPV, and the IRR? Use the WACC...
Assume the following CFs, what is the PV, the NPV, and the IRR?
Use the WACC as your required return. What is the most you should
pay for the set of cash flows and earn your WACC? WACC is 11.55%.
Do not use excel.
Year
0
1
2
3
4
5
6
7
Investment
-200,000
OCF
50,000
60,000
40,000
70,000
15,000
0.00
-10,000
Terminal CF
78,000
Problem 8-22 Calculating NPV and IRR for a Replacement A firm is considering an investment in...
Problem 8-22 Calculating NPV and IRR for a Replacement
A firm is considering
an investment in a new machine with a price of $18.15 million to
replace its existing machine. The current machine has a book value
of $6.15 million and a market value of $4.65 million. The new
machine is expected to have a four-year life, and the old machine
has four years left in which it can be used. If the firm replaces
the old machine with the...
Discuss: Evaluate the strengths and limitations of NPV and IRR methods. Also, compare NPV and IRR.
Discuss: Evaluate the strengths and limitations of NPV and IRR
methods. Also, compare NPV and IRR.
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