Question

In: Finance

Compute the (a) net present value, (b) internal rate of return (IRR), and (c) discounted payback...

Compute the (a) net present value, (b) internal rate of return (IRR), and (c) discounted payback period (DPB) for each of the following projects. The firm’s required rate of return is 14 percent.

Year

Project Alpha

Project Beta

0

$(270,000)

$(300,000)

1

120,000

0

2

120,000

(80,000)

3

120,000

555,000

Which project(s) should be purchased if they are independent? Which project(s) should be purchased if they are mutually exclusive?

Solutions

Expert Solution

jeff jeffy answered 3 months ago
Next > < Previous

Related Solutions

Calculate? (a) net present? value, (b) payback? period, (c) discounted payback? period, and? (d) internal rate...
Calculate? (a) net present? value, (b) payback? period, (c) discounted payback? period, and? (d) internal rate of return. Cost of the equipment $166,000 Reduced labor costs $45,000 Estimated life of the equipment 10 years Terminal disposal value ?$0 ?After-tax cost of capital 12 ?% Tax rate 20 ?% Assume depreciation is calculated on a? straight-line basis for tax purposes. Assume all cash flows occur at? year-end except for initial investment amounts. Calculate? (a) net present? value, (b) payback? period, (c)...
Calculate the discounted payback, net present value, and internal rate of return for the following cash...
Calculate the discounted payback, net present value, and internal rate of return for the following cash flows. -60, -50, 6, 45, 60, 70, 60, 45, 20. Discount rate at 7%. Please show work for the internal rate of return calculation.
Describe the use of internal rate of return (IRR), net present value (NPV), and the payback...
Describe the use of internal rate of return (IRR), net present value (NPV), and the payback method in evaluating project cash flows.
PAYBACK, ACCOUNTING RATE OF RETURN, PRESENT VALUE, NET PRESENT VALUE, INTERNAL RATE OF RETURN All four...
PAYBACK, ACCOUNTING RATE OF RETURN, PRESENT VALUE, NET PRESENT VALUE, INTERNAL RATE OF RETURN All four parts are independent of all other parts. Assume that all cash flows are after-tax cash flows: a.    Randy Willis is considering investing in one of the following two projects. Either project will require an investment of $10,000. The expected cash flows for the two projects follow. Assume that each project is depreciable. Year       Project A        Project B 1             $ 3,000           $3,000 2   ...
If you compare the internal rate of return to the net present value, the IRR is...
If you compare the internal rate of return to the net present value, the IRR is more reliable when you are evaluating mutually exclusive projects. the IRR is easier to apply when the cash flows are non-normal. they are very similar because the IRR is the discount rate that makes the NPV equal to one. will provide the same accept or reject answer unless you have scale differences between projects. will provide the same accept or reject answer if you...
·How do you calculate Payback Period, Net Present Value (NPV), Internal Rate of Return (IRR), and...
·How do you calculate Payback Period, Net Present Value (NPV), Internal Rate of Return (IRR), and Modified Internal Rate of Return (MIRR) for a given project and evaluate projects using each method? Explanation and example.
1 (b) Compare the merits of the net present value (NPV), internal rate of return (IRR)...
1 (b) Compare the merits of the net present value (NPV), internal rate of return (IRR) and discounted payback period methods of capital investment project appraisal, assuming the firm’s objective is to maximise the wealth of its equityholders. What conditions must apply for the net present value (NPV) and internal rate of return (IRR) methods to always give the same signal to accept or reject a capital investment project? (210 words)
the following techniques for analyzing projects: Payback Rule Discounted Payback Period Net Present Value Internal Rate...
the following techniques for analyzing projects: Payback Rule Discounted Payback Period Net Present Value Internal Rate of Return Why must corporate managers use multiple techniques of project evaluation? Which technique is most commonly used and why? Describe several ways the techniques above can be used as one progresses in their professional career. (Identify specific types of projects that can be analyzed and discuss the advantages and disadvantages of using the techniques above)
Discuss the advantages and disadvantages of Net Present Value, Internal Rate of Return, & the Payback...
Discuss the advantages and disadvantages of Net Present Value, Internal Rate of Return, & the Payback Method. Is one better than the others?
PAYBACK, ACCOUNTING RATE OF RETURN, NET PRESENT VALUE, INTERNAL RATE OF RETURN Ripit Company wants to...
PAYBACK, ACCOUNTING RATE OF RETURN, NET PRESENT VALUE, INTERNAL RATE OF RETURN Ripit Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of tractors The outlay required is $480,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year                Cash Revenues       Cash Expenses 1                      $780,000                   $600,000 2                      780,000                   600,000 3                      780,000      ...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT