Question
In: Finance
I. Determine the "internal rate of return" of the following investments. to. a. An initial payment...
I. Determine the "internal rate of return" of the following
investments.
to.
a. An initial payment of $ 10,000 which will produce a cash
flow (NCF) annual of $ 1,993 for the next ten years.
b. An initial payment of $ 10,000 which will produce a cash
flow (NCF) annual of $ 2,054 for the next twenty years.
c. An initial payment of $ 10,000 which will produce a cash
flow (NCF) annual of $ 1,193 for the next twelve years.
d. An initial payment of $ 10,000 which will produce a cash
flow (NCF) annual of $ 2,843 for the next five years.
Solutions
Expert Solution
IRR is the rate at which NPV = 0
IRR is found using excel function with cash flows as the input
a. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 1,993 for the next ten years.
IRR = 15.01%
b. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 2,054 for the next twenty years.
IRR = 20.00%
c. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 1,193 for the next twelve years.
IRR = 6.00%
d. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 2,843 for the next five years.
IRR = 13.03%
jeff jeffy answered 1 year agoRelated Solutions
Determine the internal rate of return on the following project: An initial outlay of 9000 resulting...
Determine the internal rate of return on the following project:
An initial outlay of 9000 resulting in a cash inflow of 1800 at the
end of year 1, 4800 at the end of year 2, and 7800 at the end of
year 3
Calculate the Internal Rate of Return of each of the following potential investments and recommend whether...
Calculate the Internal Rate of Return of each of the following
potential investments and recommend whether or not to include them
in the upcoming capital budget given that the firm’s cost of
capital is 14.5%.
New Software:
Initial
Cost
$25,000
Training
Cost
$12,000
Annual Cost
Savings
$10,500
Useful
Life
6 Years
Machine A or Machine B
Note: The key word here is “or”.
One or the other machine must be bought. So, the analysis should be
based on the incremental...
Calculate the Internal Rate of Return of each of the following potential investments and recommend whether...
Calculate the Internal Rate of Return of each of the following
potential investments and recommend whether or not to include them
in the upcoming capital budget given that the firm’s cost of
capital is 14.5%.
New Software:
Initial
Cost
$25,000
Training
Cost
$12,000
Annual Cost Savings
$10,500
Useful
Life
6 Years
Machine A or Machine B
Note: The key word here is “or”.
One or the other machine must be bought. So, the analysis should be
based on the incremental...
Calculate the internal rate of return on the following projects: Initial outlay of $50,000 with an...
Calculate the internal rate of return on the following
projects:
Initial outlay of $50,000 with an after-tax cash flow of
$10,000 per year for eight years.
Initial outlay of $600,000 with an after-tax cash flow of
$120,000 per year for ten years.
Initial outlay of $25,000 with an after-tax cash flow $11,500
per year for three years.
The internal rate of return represents the rate of interest that recovers the initial investment outlay....
The internal rate of return represents the rate of interest that
recovers the initial investment outlay. Discuss the validity of
this statement.
paragraph answer:
Which of the following statements related to the internal rate of return (IRR) are correct? I....
Which of the following statements related to the internal rate
of return (IRR) are correct?
I. The IRR method of analysis can be adapted to handle
non-conventional cash flows.
II. The IRR that causes the net present value of the differences
between two project's cash flows to equal zero is called the
crossover rate.
III. The IRR tends to be used more than net present value simply
because its results are easier to comprehend.
IV. Both the timing and the...
Determine the minimum and maximum internal rate of return for the following cash flow. Use Excel....
Determine the minimum and maximum internal rate of return for
the following cash flow. Use Excel.
Year
Net Cash
0
-2500
1
1500
2
1000
3
-1500
4
900
5
500
Internal rate of return and net present value are related in that: Internal rate of return...
Internal rate of return and net present value are related in
that:
Internal rate of return formed the basis for the eventual
development of the net present value theory.
Internal rate of return finds a discount rate that produces a
net present value of zero.
Net present value formed the basis for the eventual development
of the internal rate of return theory.
Net present value can only be used to evaluate irregular cash
flows, whereas internal rate of return can...
Calculator Internal Rate of Return Method The internal rate of return method is used by King...
Calculator
Internal Rate of Return Method
The internal rate of return method is used by King Bros.
Construction Co. in analyzing a capital expenditure proposal that
involves an investment of $73,600 and annual net cash flows of
$10,000 for each of the 10 years of its useful life.
Present Value of an Annuity of $1 at Compound
InterestYear6%10%12%15%20%10.9430.9090.8930.8700.83321.8331.7361.6901.6261.52832.6732.4872.4022.2832.10643.4653.1703.0372.8552.58954.2123.7913.6053.3522.99164.9174.3554.1113.7843.32675.5824.8684.5644.1603.60586.2105.3354.9684.4873.83796.8025.7595.3284.7724.031107.3606.1455.6505.0194.192
a. Determine a present value factor for an annuity of $1
which can be used in determining the internal rate of return....
4. Internal rate of return (IRR) The internal rate of return (IRR) refers to the compound...
4. Internal rate of return (IRR)
The internal rate of return (IRR) refers to the compound annual
rate of return that a project generates based on its up-front cost
and subsequent cash flows. Consider the case of Blue Pencil
Publishing:
Consider the following case:
Blue Pencil Publishing is evaluating a proposed capital
budgeting project (project Sigma) that will requ ire an initial
investment of $800,000.
Blue Pencil Publishing has been basing capital budgeting
decisions on a project's NPV; however, its...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Q. Compare and contrast Ripple-Carry Adder and Carry-Look ahead Adder 1) In a 4-bit ripple-carry adder...
- 1. How are a buffer and a NOT gate similar? 2. How are a buffer and...
- Section 9.4 Practice Problems: 2. How many CSUN students would have to be polled to determine...
- Cybersecuirty Describe the different types of firewalls that are on the market and how they differ...
- Please take time to view the video, “Was America Founded to Be Secular? “ as a...
- 7. A health psychologist knew that corporate executives in general have an average score of 80...
- Submission Guidelines This assignment may be submitted for full credit until Friday, October 4th at 11:59pm....
ADVERTISEMENT