Corporate_Finance_9th_edition_Solutions_Manual_FINAL0

14 dry prepeg cfo c01 f01 c02 f02 c03 f03 i 10 npv

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Unformatted text preview: 150 1 $100 1 CD-ROM CFo C01 F01 C02 F02 C03 F03 I = 10% NPV CPT $417.05 CD-ROM CFo C01 F01 C02 F02 C03 F03 IRR CPT 25.03% –$1,900 $1,400 1 $900 1 $400 1 c. –$600 $700 1 $150 1 $100 1 –$1,900 $1,400 1 $900 1 $400 1 d. –$1,300 $700 1 $750 1 $300 1 138 15. a. CDMA CFo 0 C01 $13,000,000 F01 1 C02 $7,000,000 F02 1 C03 $2,000,000 F03 1 I = 10% NPV CPT $19,105,935.39 G4 CFo 0 C01 $10,000,000 F01 1 C02 $25,000,000 F02 1 C03 $20,000,000 F03 1 I = 10% NPV CPT $44,778,362.13 Wi-Fi CFo 0 C01 $10,000,000 F01 1 C02 $20,000,000 F02 1 C03 $50,000,000 F03 1 I = 10% NPV CPT $63,185,574.76 PICDMA = $19,105,935.39 / $50,000,000 = 3.82 PIG4 = $44,778,362.13 / $10,000,000 = 4.48 PIWi-Fi = $63,185,574.76 / $15,000,000 = 4.21 b. CDMA CFo –$5,000,000 C01 $13,000,000 F01 1 C02 $7,000,000 F02 1 C03 $2,000,000 F03 1 I = 10% NPV CPT $14,105,935.39 AZM CFo C01 F01 C02 F02 C03 F03 I = 10% NPV CPT $206,912.10 AZM CFo C01 F01 C02 F02 C03 F03 IRR CPT 51.43% –$300,000 $270,000 1 $180,000 1 $150,000 1 G4 Wi-Fi CFo –$10,000,000 CFo –$15,000,000 C01 $10,000,000 C01 $10,000,000 F01 1 F01 1 C02 $25,000,000 C02 $20,000,000 F02 1 F02 1 C03 $20,000,000 C03 $50,000,000 F03 1 F03 1 I = 10% I = 10% NPV CPT NPV CPT $34,778,362.13 $48,185,574.76 AZF CFo C01 F01 C02 F02 C03 F03 I = 10% NPV CPT $183,245.68 AZF CFo C01 F01 C02 F02 C03 F03 IRR CPT 26.04% –$600,000 $250,000 1 $400,000 1 $300,0000 1 16. b. c. –$300,000 $270,000 1 $180,000 1 $150,000 1 –$600,000 $250,000 1 $400,000 1 $300,0000 1 139 17. a. Project A CFo C01 F01 C02 F02 I = 12% NPV CPT $236,607.14 0 $140,000 1 $140,000 1 Project B CFo C01 F01 C02 F02 I = 12% NPV CPT $439,413.27 0 $260,000 1 $260,000 1 Project C CFo C01 F01 C02 F02 I = 12% NPV CPT $229,512.84 0 $150,000 1 $120,000 1 PIA = $236,607.14 / $200,000 = 1.18 PIB = $439,413.27 / $400,000 = 1.10 PIC = $229,512.84 / $200,000 = 1.15 b. Project A CFo C01 F01 C02 F02 I = 12% NPV CPT $36,607.14 Dry prepeg CFo C01 F01 C02 F02 C03 F03 I = 10% NPV CPT $605,259.20 Dry prepeg CFo C01 F01 C02 F02 C03 F03 IRR CPT 34.45% –$200,000 $140,000 1 $140,000 1 Project B CFo C01 F01 C02 F02 I = 12% NPV CPT $39,413.27 –$400,000 $260,000 1 $260,000 1 Project C CFo C01 F01 C02 F02 I = 12% NPV CPT $29,591.84 –$200,000 $150,000 1 $120,000 1 18. b. –$1,400,000 $900,000 1 $800,000 1 $700,000 1 Solvent prepeg CFo –$600,000 C01 $300,000 F01 1 C02 $500,000 F02 1 C03 $400,0000 F03 1 I = 10% NPV CPT $386,476.33 Solvent prepeg CFo –$600,000 C01 $300,000 F01 1 C02 $500,000 F02 1 C03 $400,0000 F03 1 IRR CPT 41.87% c. –$1,400,000 $900,000 1 $800,000 1 $700,000 1 140 d. CFo C01 F01 C02 F02 C03 F03 IRR CPT 27.49% 19. a. NP-30 CFo C01 F01 C02 F02 C03 F03 C04 F04 C05 F05 I = 15% NPV CPT $86,344.82 NP-30 CFo C01 F01 C02 F02 C03 F03 C04 F04 C05 F05 IRR CPT 22.85% –$800,000 $600,000 1 $300,000 1 $300,000 1 –$450,000 $160,000 5 NX-20 CFo C01 F01 C02 F02 C03 F03 C04 F04 C05 F05 I = 15% NPV CPT $147,826.34 NX-20 CFo C01 F01 C02 F02 C03 F03 C04 F04 C05 F05 IRR CPT 40.09% –$200,000 $80,000 1 $92,000 1 $105,800 1 $121,670 1 $139,921 1 b. –$450,000 $160,000 5 –$200,000 $80,000 1 $92,000 1 $105,800 1 $121,670 1 $139,921 1 141 c. CFo C01 F01 C02 F02 C03 F03 C04 F04 C05 F05 IRR CPT 1.74% d. –$250,000 $80,000 1 $68,000 1 $54,200 1 $38,330 1 $20,079 1 NP-30 CFo –$450,000 C01 $160,000 F01 5 C02 F02 C03 F03 C04 F04 C05 F05 I = 15% NPV CPT $536,344.82 NX-20 CFo C01 F01 C02 F02 C03 F03 C04 F04 C05 F05 I = 15% NPV CPT $347,826.34 –$200,000 $80,000 1 $92,000 1 $105,800 1 $121,670 1 $139,921 1 PINP-30 = $536,344.82 / $450,000 = 1.192 PINX-20 = $347,826.34 / $200,000 = 1.739 20. b. Project A CFo C01 F01 C02 F02 IRR CPT 18.91% –$280,000 $190,000 1 $170,000 1 Project B CFo C01 F01 C02 F02 IRR CPT 20.36% –$390,000 $270,000 1 $240,000 1 Project C CFo C01 F01 C02 F02 IRR CPT 32.10% –$230,000 $160,000 1 $190,000 1 142 c. Project A CFo C01 F01 C02 F02 I = 10% NPV CPT $313,223.14 0 $190,000 1 $170,000 1 Project B CFo C01 F01 C02 F02 I = 20% NPV CPT $391,666.67 0 $270,000 1 $240,000 1 Project C CFo C01 F01 C02 F02 I = 15% NPV CPT $282,797.73 0 $160,000 1 $190,000 1 PIA = $313,223.14 / $280,000 = 1.12 PIB = $391,666.67 / $390,000 = 1.004 PIC = $282,797.73 / $230,000 = 1.23 d. Project A CFo C01 F01 C02 F02 I = 10% NPV CPT $33,223.14 CFo C01 F01 C02 F02 IRR CPT ERROR 7 –$280,000 $190,000 1 $170,000 1 Project B CFo C01 F01 C02 F02 I = 20% NPV CPT $1,666.67 –$390,000 $270,000 1 $240,000 1 Project C CFo C01 F01 C02 F02 I = 15% NPV CPT $52,797.73 –$230,000 $160,000 1 $190,000 1 28. $20,000 –$26,000 1 $13,000 1 143 CHAPTER 6 MAKING CAPITAL INVESTMENT DECISIONS Answers to Concepts Review and Critical Thinking Questions 1. In this context, an opportunity cost refers to the value of an asset or other input that will be used in a project. The relevant cost is what the asset or input is actually worth today, not, for example, what it cost to acquire. a. Yes, the reduction in the sales of the company’s other products, referred to as erosion, should be treated as an incremental cash flow. These lost sales are...
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