Question
In: Economics
Epsilon company is considering investing in Project X or Project Y. Project X generates the following...
Epsilon company is considering investing in Project X or Project Y. Project X generates the following cash flows: year “zero” = 307 dollars (outflow); year 1 = 252 dollars (inflow); year 2 = 265 dollars (inflow); year 3 = 343 dollars (inflow); year 4 = 182 dollars (inflow). Project Y generates the following cash flows: year “zero” = 230 dollars (outflow); year 1 = 120 dollars (inflow); year 2 = 100 dollars (inflow); year 3 = 200 dollars (inflow); year 4 = 120 dollars (inflow). The MARR is 10%. Compute the External Rate of Return (ERR) of the BEST project
PLEASE INCLUDE FORMULAS AND DETAILED STEPS. NO EXCEL CALCULATIONS PLEASE
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Epsilon company is considering investing in Project X or Project Y. Project X generates the following...
Epsilon company is considering investing in Project X or Project
Y. Project X generates the following cash flows: year “zero” = 307
dollars (outflow); year 1 = 252 dollars (inflow); year 2 = 265
dollars (inflow); year 3 = 343 dollars (inflow); year 4 = 182
dollars (inflow). Project Y generates the following cash flows:
year “zero” = 230 dollars (outflow); year 1 = 120 dollars (inflow);
year 2 = 100 dollars (inflow); year 3 = 200 dollars (inflow); year...
GUI company is considering investing in Project A or Project B. Project A generates the following...
GUI company is considering investing in Project A or Project B.
Project A generates the following cash flows: year “zero” = 313
dollars (outflow); year 1 = 297 dollars (inflow); year 2 = 337
dollars (inflow); year 3 = 330 dollars (inflow); year 4 = 149
dollars (inflow). Project B generates the following cash flows:
year “zero” = 510 dollars (outflow); year 1 = 140 dollars (inflow);
year 2 = 110 dollars (inflow); year 3 = 210 dollars (inflow); year...
Yep Company is considering investing in Project G or Project H. Project G generates the following...
Yep Company is considering investing in Project G or Project H.
Project G generates the following cash flows: year “zero” = 254
dollars (outflow); year 1 = 244 dollars (inflow); year 2 = 346
dollars (inflow). Project H generates the following cash flows:
year “zero” = 200 dollars (outflow); year 1 = 180 dollars (inflow);
year 2 = 100 dollars (inflow). The MARR is 10 %. Compute the
Internal Rate of Return (IRR) of the BEST project.
PLEASE INCLUDE FORMULAS...
XYZ company is considering investing in Project Q or Project U. Project Q generates the following...
XYZ company is considering investing in Project Q or Project U.
Project Q generates the following cash flows: year “zero” = 281
dollars (outflow); year 1 = 211 dollars (inflow); year 2 = 330
dollars (inflow); year 3 = 318 dollars (inflow); year 4 = 196
dollars (inflow). Project U generates the following cash flows:
year “zero” = 230 dollars (outflow); year 1 = 150 dollars (inflow);
year 2 = 105 dollars (inflow); year 3 = 201 dollars (inflow); year...
A company is considering investing in project X. The company has a cost of capital of...
A company is considering investing in project X. The company has
a cost of capital of 10% p.a. Project X is a 9-year project with an
initial cost of 400,000. The project will generate the following
cash flows at the end of the years:
Years
Cash flows
1
90,000
2
80,000
3
50,000
4
50,000
5
50,000
6
50,000
7
50,000
8
50,000
9
15,000
a) Calculate the payback period (in
years) for project X. Round your answer to 2 decimal...
You are considering investing in two securities, X and Y. The following data are available for...
You are considering investing in two securities, X and Y. The
following data are available for the two securities: Security X
Security Y Expected return 0.09 0.02 Standard deviation of returns
0.04 0.06 Beta 1.00 0.85 Round your answers to two decimal places.
If you invest 40 percent of your funds in Security X and 60 percent
in Security Y and if the correlation of returns between X and Y is
+0.45, compute the following: The expected return from the...
You are considering investing in two securities, X and Y. The following data are available for...
You are considering investing in two securities, X and Y. The
following data are available for the two securities:
Security X
Security Y
Expected return
0.18
0.07
Standard deviation of returns
0.04
0.06
Beta
1.60
0.55
Round your answers to two decimal places.
If you invest 40 percent of your funds in Security X and 60
percent in Security Y and if the correlation of returns between X
and Y is +0.55, compute the following:
The expected return from the...
Two firms, Firm X and Firm Y, are both considering investing in Project Z, which has...
Two firms, Firm X and Firm Y, are both considering investing in
Project Z, which has an IRR of 10.60%
and a beta of 0.9. Firm X has an asset beta of 0.7 and Firm Y’s
asset beta is 1.2. The risk-free rate is 3.00%
and the expected return on the market is 11.00%. Explain clearly
and concisely whether each firm should
take the project, being sure to justify your reasoning.
Yelp! Company is considering investing in Project G or Project H. The projects generate the following...
Yelp! Company is considering investing in Project G or Project
H. The projects generate the following end of year cash flows:
Year 0
Year 1
Year 2
Project G
-250
246
236
Project H
-200
180
100
The MARR is 10% per year, compounded annually. Compute the
Internal Rate of Return (IRR) of the BEST project. (note:
round your answer to two decimal places and do not include spaces
or percentage signs. If the answer is 1.53%, write 1.53 as...
A company is considering investing in a project that requires the company to take on risks...
A company is considering investing in a project that requires
the company to take on risks outside of the company's current
scope. As a result, which of the following things will happen?
Select one:
a. The company's stock value would drop unless the project
increase the company's expected returns.
b. The company does not have to recalculate its WACC to evaluate
the project.
c. All of these things.
d. The project would decrease the company's cost of equity.
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