Question
In: Finance
Assume an investment opportunity which provides the following cash flows: 15,000$ in one year, 9,000$ in...
Assume an investment opportunity which provides the following cash flows: 15,000$ in one year, 9,000$ in two years, 8,750$ in three years, 12,000$ in four years and 5,000$ in five years. If the relevant required rate of return for this investment is 8%, what is the investment’s value in year three?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Assume an investment opportunity which provides the following cash flows: 15,000$ in one year, 9,000$ in...
Assume an investment opportunity which provides the following
cash flows: 15,000$ in one year, 9,000$ in two years, 8,750$ in
three years, 12,000$ in four years and 5,000$ in five years. If the
relevant required rate of return for this investment is 8%, what is
the investment’s value in year three?
Assume a $52,000 investment and the following cash flows for two alternatives. Year Investment A Investment...
Assume a $52,000 investment and the following cash flows for two
alternatives.
Year
Investment A
Investment B
1
$15,000
$25,000
2
15,000
15,000
3
15,000
20,000
4
10,000
-
5
15,000
-
a. Calculate the payback for investment A and B. Round your
answers to 2 decimal places.
Investment A
years
Investment B
years
b. Which investment would you select under the payback
method?
-Investment A
-Investment B
c. If the inflow in the fifth year for Investment A was...
Assume a $40,000 investment and the following cash flows for two alternatives. Year Investment A Investment...
Assume a $40,000 investment and the following cash flows for two
alternatives. Year Investment A Investment B 1 $ 5,000 $ 25,000 2
12,000 10,000 3 15,000 20,000 4 10,000 — 5 10,000 — a. Calculate
the payback for investment A and B. (Round your answers to 2
decimal places.) b. Which investment would you select under the
payback method? Investment A Investment B c. If the inflow in the
fifth year for Investment A was $10,000,000 instead of $10,000,...
Assume a $95,000 investment and the following cash flows for two alternatives: Year Investment A Investment...
Assume a $95,000 investment and the following cash flows for two
alternatives:
Year
Investment A
Investment B
1
$25,000
$30,000
2
15,000
30,000
3
30,000
40,000
4
30,000
—
5
20,000
—
Calculate the payback period for investment A and investment B.
Show calculation. (Do not round
intermediate calculations. Round the final answers to 2 decimal
places.)
Payback period
Investment A
years
Investment B
years
Assume a $95,000 investment and the following cash flows for two alternatives. Year Investment A Investment...
Assume a $95,000 investment and the following cash flows for two
alternatives.
Year
Investment A
Investment B
1
$
35,000
$
40,000
2
30,000
35,000
3
20,000
25,000
4
20,000
—
5
20,000
—
a. Calculate the payback for investment A and B.
(Round your answers to 2 decimal places.)
b. Which investment would you select under the
payback method?
Investment A
Investment B
c. If the inflow in the fifth year for Investment
A was $20,000,000 instead...
Assume a $105,000 investment and the following cash flows for two alternatives. Year Investment X Investment...
Assume a $105,000 investment and the following cash flows for
two alternatives.
Year
Investment X
Investment Y
1
$30,000
$40,000
2
45,000
35,000
3
15,000
35,000
4
30,000
—
5
10,000
—
a. Calculate the payback for investment X and Y.
(Do not round intermediate calculations. Round your answers
to 2 decimal places.)
b. Which alternative would you select under the
payback method?
Investment X
Investment Y
Assume a $70,000 investment and the following cash flows for two alternatives. Year Investment X Investment...
Assume a $70,000 investment and the following cash flows for two
alternatives.
Year
Investment X
Investment Y
1
$15,000
$35,000
2
20,000
20,000
3
20,000
20,000
4
20,000
—
5
15,000
—
a. Calculate the payback for investment X and Y.
(Do not round intermediate calculations. Round your answers
to 2 decimal places.)
b. Which alternative would you select under the
payback method?
Investment X
Investment Y
Assume a $62,000 investment and the following cash flows for two alternatives. Year Investment X Investment...
Assume a $62,000 investment and the following cash flows for two
alternatives.
Year
Investment X
Investment Y
1
$20,000
$35,000
2
15,000
15,000
3
15,000
22,000
4
15,000
—
5
25,000
—
a. Calculate the payback for investment X and Y.
(Do not round intermediate calculations. Round your answers
to 2 decimal places.)
b. Which alternative would you select under the
payback method? Investment X or Y?
The Terug Corporation has been presented with an investment opportunity which will yield end-of-year cash flows...
The Terug Corporation has been presented with an investment
opportunity which will yield end-of-year cash flows of $30,000 per
year in Years 1 through 4, $35,000 per year in Years 5 through 9,
and $40,000 in Year 10. This investment will cost the firm $150,000
today, and the firm's cost of capital is 10 percent. What are the
NPV, IRR and MIRR values for this investment?
a.
NPV $135,984; IRR 17.07%; MIRR 11.27%
b.
NPV $18,023; IRR 16.24%: MIRR 13.27%...
Payback method Assume a $90,000 investment and the following cash flows for two alternatives. Year Investment...
Payback method Assume
a $90,000 investment and the following cash flows for two
alternatives.
Year
Investment A
Investment B
1................
$25,000
$40,000
2................
30,000
40,000
3................
25,000
28,000
4................
19,000
—
5................
25,000
—
a.
Calculate the payback for investment A and B.
b. If the
inflow in the fifth year for Investment A was $25,000,000 instead
of $25,000, would your answer change under the payback method?
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