Chap_11_Assignment_Solutions

Chap_11_Assignment_Solutions - BUS 320 Chapter 11...

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BUS 320 Chapter 11 Assignment Solutions 1) a) 1, , P/YR 12, I/YR 52125, +/-, CF 0 12000, CF 1 12000, CF 2 12000, CF 3 12000, CF 4 12000, CF 5 12000, CF 6 12000, CF 7 12000, CF 8 , NPV = $7,486.68 b) 1, , P/YR 52125, +/-, CF 0 12000, CF 1 12000, CF 2 12000, CF 3 12000, CF 4 12000, CF 5 12000, CF 6 12000, CF 7 12000, CF 8 , IRR/YR = 16.0% c) Year Cumulative Cash Flows 1 $12,000 2 $24,000 3 $36,000 4,125 4 $48,000 Payback = 4 + --------- = 5 $60,000 12,000 6 $72,000 4.34 years 7 $84,000 8 $96,000 2) a) NPV @ 5%: Project A Project B 5, I/YR 5, I/YR 25, +/-, CF 0 20, +/-, CF 0 5, CF 1 10, CF 1 10, CF 2 9, CF 2 17, CF 3 6, CF 3 , NPV = $3.52 , NPV = $2.87
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NPV @ 10%: Project A Project B 10, I/YR 10, I/YR 25, +/-, CF 0 20, +/-, CF 0 5, CF 1 10, CF 1 10, CF 2 9, CF 2 17, CF 3 6, CF 3 , NPV = $.58 , NPV = $1.04 NPV @ 15%: Project A Project B 15, I/YR 15, I/YR 25, +/-, CF 0 20, +/-, CF 0 5, CF 1 10, CF 1 10, CF 2 9, CF 2 17, CF 3 6, CF 3 , NPV = -$1.91 , NPV = -$.55 b) IRR @ 5%,10%, and 15%: Project A Project B 25, +/-, CF
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Chap_11_Assignment_Solutions - BUS 320 Chapter 11...

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