hw ch9 - Zohaib Khan 1) -4500+1200+2500 = -1100 =>...

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Zohaib Khan 1) -4500+1200+2500 = -1100 => 2(1100/3400) = 2.32 2) -3000+(3(800)) = -600 => 3(600/800) = 3.75 -5000+(5(800)) = -200 => 6(200/800) = 5.25 -7000 +(8(800)) = 8.33 3) Project A: -50000+30000+18000 = 2(2000/10000) = 2.2 years Project B: -70000+9000+25000+35000 = 3(1000/425000) = 3.0024 Project A is better so accept project A and reject B 4) Year CF Dis. CF Acc. PVCF 0 -8000 -8000 -8000 1 7000 6140 -1860 2 7500 5771 3 8000 5400 4 8500 5033 =>1(1860/5771)= 1.32 5) When it is 0% => 4(1600/2100) =4.76 When it is 5% => Year CF Dis. CF 0 -10000 -10000 1 2100 2000 2 2100 1905 3 2100 1814 4 2100 1728 5 2100 1645 =>5(908/1567) = 5.58 years 6) = (($1,416,000 + 1,868,000 + 1,562,000 + 985,000) / 4)/(15M/2) = 19.44% 7) After performing it in calculator the IRR is 26.48% higher than the required return therefore, the project should be accepted. 8) At 11% the NPV is 7,423. since it is positive project should be accepted. At 30% the NPV is -1,326 therefore it should be rejected since it is negative.
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This note was uploaded on 05/25/2008 for the course FRL 301 taught by Professor Carney during the Spring '08 term at Cal Poly Pomona.

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hw ch9 - Zohaib Khan 1) -4500+1200+2500 = -1100 =>...

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