Chap 9 - Expected net cash flows Time Project A Project B 0...

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Expected net cash flows Time Project A Project B 0 ($10,000) ($10,000) 1 $5,400 $4,500 2 $3,400 $3,600 3 $4,500 $5,400 Project A Project B 0% Annual discount rate. 0% Annual discount rate. $3,300.00 Net present value of this investment $3,500.00 Net present value of this investment 5% Annual discount rate. 5% Annual discount rate. $2,114.03 Net present value of this investment $2,215.74 Net present value of this investment 10% Annual discount rate. 10% Annual discount rate. $1,099.92 Net present value of this investment $1,123.22 Net present value of this investment 15% Annual discount rate. 15% Annual discount rate. $225.36 Net present value of this investment $185.75 Net present value of this investment 20% Annual discount rate. 20% Annual discount rate. ($534.72) Net present value of this investment ($625.00) Net present value of this investment 25% Annual discount rate. 25% Annual discount rate. ($1,200.00) Net present value of this investment ($1,331.20) Net present value of this investment What is the crossover rate? Cash flow Time differential 0 $0 1 $900 2 ($200) 3 ($900)
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11.73% Answer
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Expected net cash flows Time Project A 0 ($28,000,000) 1 $51,968,000 2 ($9,686,520) 26% Annual discount rate. $7,143,083.90 Net present value of this investment What is the crossover rate? Cash flow Time differential 0 ($28,000,000) 1 $51,968,000 2 ($9,686,520) 64.58% Largest Smallest
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Expected net cash flows Time Project A Project B 0 ($324,527) ($30,908) 1 $28,900 $11,758 2 $54,000 $11,688 3 $50,000 $9,755 4 $401,000 $11,292 15.00% a $191,627 $7,462 3.48 2.76 Answer b ($275,847.95) ($162,882.95) $24,565.00 $45,900.00 $42,500.00 $340,850.00 c $3,584.06 $1,024.46 Answer d 15.37% 16.66% Answer e
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Net Cash Inflow 1 + growth rate 1 + Return 41000 36936.94 1.07 1.11 1.11 1 43870 35605.88 1.07 1.23 1.11 2 B 46940.9 34322.78 1.07 1.37 1.11 3 50226.76 33085.92 1.07 1.52 1.11 4 53742.64 31893.64 1.07 1.69 1.11 5 57504.62 30744.32 1.07 1.87 1.11 6 61529.94 29636.42 1.07 2.08 1.11 7 65837.04 28568.44 1.07 2.3 1.11 8 70445.63 27538.94 1.07 2.56 1.11 9 75376.83 26546.55 1.07 2.84 1.11 10 80653.21 25589.92 1.07 3.15 1.11 11 86298.93 24667.76 1.07 3.5 1.11 12 92339.86 23778.83 1.07 3.88 1.11 13 98803.65 22921.93 1.07 4.31 1.11 14 105719.9 22095.92 1.07 4.78 1.11 15 113120.29 21299.67 1.07 5.31 1.11 16 121038.71 20532.11 1.07 5.9 1.11 17 129511.42 19792.22 1.07 6.54 1.11 18 138577.22 19078.98 1.07 7.26 1.11 19 148277.63 18391.45 1.07 8.06 1.11 20 158657.06 17728.7 1.07 8.95 1.11 21 169763.06 17089.83 1.07 9.93 1.11 22 181646.47 16473.98 1.07 11.03 1.11 23 194361.72 15880.32 1.07 12.24 1.11 24 207967.05 15308.06 1.07 13.59 1.11 25 222524.74 14756.41 1.07 15.08 1.11 26 238101.47 14224.65 1.07 16.74 1.11 27 254768.57 13712.05 1.07 18.58 1.11 28 272602.37 13217.92 1.07 20.62 1.11 29 291684.54 12741.6 1.07 22.89 1.11 30 312102.46 12282.45 1.07 25.41 1.11 31 333949.63 11839.83 1.07 28.21 1.11 32 357326.1 11413.17 1.07 31.31 1.11 33
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382338.93 11001.89 1.07 34.75 1.11 34 409102.66 10605.42 1.07
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This note was uploaded on 03/14/2008 for the course FIN 301 taught by Professor Stumbo during the Spring '08 term at Nevada.

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Chap 9 - Expected net cash flows Time Project A Project B 0...

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