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11.value:
5.00 points
Garage, Inc., has identified the following two mutually exclusive projects:
Year
Cash Flow (A) Cash Flow (B)
0 –$ 29,700 –$ 29,700
1 15,100
4,650
2 13,000 10,150
3 9,550 15,900
4 5,450 17,500
At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Discount rate %
12.value:
5.00 points
Consider the following two mutually exclusive projects:
Year Cash Flow (X) Cash Flow (Y)
0 –$ 20,300 –$ 20,300
1 8,925 10,250
2 9,250 7,875
3 8,875 8,775
What is the crossover rate for these two projects? (Round your answer to 2 decimal places. (e.g., 32.16)).
Crossover rate %
13.value:
5.00 points
Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows:
Year Cash Flow
0 –$ 38,600,000
1 62,600,000
2 – 11,600,000
Requires 11% rate of return.
b.
This project has two IRR’s, namely ______??_____ percent and 40.84%, in order from smallest to largest. (Note: If you can only compute one IRR value, you should input that amount into both answer boxes in order to obtain some credit.) (Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))
16.value:
5.00 points
Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 –$ 347,000 –$ 49,500
1 48,000 24,300
2 68,000 22,300
3 68,000 19,800
4 443,000 14,900
Whichever project you choose, if any, you require a 15 percent return on your investment.
b-1
What is the discounted payback period for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
Discounted payback period
Project A
years
Project B years
e-1
What is the profitability index for each project? (Do not round intermediate calculations and round your final answers to 3 decimal places. (e.g., 32.161))
Profitability index
Project A
Project B
17.value:
5.00 points
An investment has an installed cost of $525,800. The cash flows over the four-year life of the investment are projected to be $223,850, $240,450, $207,110, and $155,820.
If the discount rate is infinite, what is the NPV? (Negative amount should be indicated by a minus sign.)
NPV $
18.value:
5.00 points
Slow Ride Corp. is evaluating a project with the following cash flows:
Year Cash Flow
0 –$ 29,400
1 11,600
2 14,300
3 16,200
4 13,300
5 – 9,800
The company uses an interest rate of 8 percent on all of its projects.
Calculate the MIRR of the project using the discounting approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
MIRR %
Calculate the MIRR of the project using the combination approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
MIRR %
19.value:
5.00 points
Slow Ride Corp. is evaluating a project with the following cash flows:
Year Cash Flow
0 –$ 28,700
1 10,900
2 13,600
3 15,500
4 12,600
5 – 9,100
The company uses a discount rate of 12 percent and a reinvestment rate of 7 percent on all of its projects.
Calculate the MIRR of the project using the discounting approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
MIRR %
Calculate the MIRR of the project using the reinvestment approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
MIRR %
Calculate the MIRR of the project using the combination approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
MIRR %
20.value:
5.00 points
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:
Year Cash Flow
0 –$ 1,260,000
1 435,000
2 500,000
3 395,000
4 350,000
All cash flows will occur in Erewhon and are expressed in dollars. In an attempt to improve its economy, the Erewhonian government has declared that all cash flows created by a foreign company are “blocked” and must be reinvested with the government for one year. The reinvestment rate for these funds is 3 percent.
If Anderson uses a required return of 12 percent on this project, what are the NPV and IRR of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
NPV $
IRR %