FIN515-Homework Week 5_Ahmad Qamhieh.xlsx - Keller Graduate School of Management FIN-515 Managerial Finance Homework Week 5 Professor James Mazza

FIN515-Homework Week 5_Ahmad Qamhieh.xlsx - Keller Graduate...

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Keller Graduate School of Management FIN-515 Managerial Finance Homework Week 5 Professor: James Mazza Student: Ahmad Qamhieh Problem (10-8)NPVs, IRRs, and MIRRs for Independent ProjectsYear012Truck-1710051005100Pulley-2243075007500Cost of Capital14%Calculate the IRR, the NPV, and the MIRR for each project, and indicate the cor Truck NPV = -CF0 + CF1 / (1+r)^n Truck NPV 408.71 Pulley NPV 3318.1073 Truck IRR 15% Pulley IRR 20% Truck MIRR 14.54% Pulley MIRR 17.19% Problem (10-9) Year 0 1 2 Electric -22000 6290 6290 Gas -17500 5000 5000 Cost Of Capital 12% Calculate the NPV and IRR for each type of truck, and decide which to recomm Electric NPV 3860.75 Gas NPV 3057.037 Electric IRR 18% Gas IRR 18% Recommend Electric because of a higher NPV by $803.72, The electric forklift Problem (10-10)  NPVs and IRRs for Mutually Exclusive Projects  Capital Budgeting Methods
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Year 0 1 2 Project S -10000 3000 3000 Project L -25000 7400 7400 Cost of Capital 12% NPV (S) 814.33 NPV (L) 1675.34 IRR (S) 15% IRR (L) 15% MIRR (S) 14% MIRR (L) 13% Profitability Index = PV of future cash flows / Initial cost PV (S) 10814.33 PV (L) 26675.34 PI (S) 1.081 PI (L) 1.067 Problem (11-2) Operating Cash Flow Sales 18,000,000 Operating Cost 9,000,000 Depreciation 4,000,000 Interest Expense
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