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Student_EOC_Chapter_08

# Student_EOC_Chapter_08 - Input area Annual cash flows A B...

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Chapter 8 Problems 5, 6, 11, 15 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green

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Chapter 8 Question 5 Input area: Required Return Annual cash flows: Year 0 Year 1 Year 2 Year 3 . Output area: IRR Err:523 Accept/Reject Err:523
Chapter 8 Question 6 Input area: Required Return Required Return Annual cash flows: Year 0 \$- Year 1 \$- Year 2 \$- Year 3 \$- . Output area: NPV at 0% \$- Accept./Reject Reject NPV at 0% \$- Accept/Reject Reject

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Chapter 8 Question 11 Input area: Annual cash flows: X Y Year 0 Year 1 Year 2 Year 3 Output area: IRR (X) Err:523 IRR (Y) Err:523 CF difference Year 0 \$- Year 1 \$- Year 2 \$- Year 3 \$- Crossover rate Err:523 Discount Rate NPV (X) NPV (Y) 0% \$- \$- 5% \$- \$- 10% \$- \$- 15% \$- \$- 20% \$- \$- 25% \$- \$-
Chapter 8 Question 15

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Unformatted text preview: Input area: Annual cash flows: A B Year 0 Year 1 Year 2 Year 3 Year 4 Required return Output area: a. Payback (A) 0.00 Payback (B) 0.00 Payback criterion implies accept Project B because it pays back sooner. b. NPV (A) \$- NPV (B) \$- NPV criterion implies accept Project B because it has a higher NPV. c. IRR (A) Err:523 IRR (B) Err:523 IRR decision rule implies accept Err:523 because its IRR is greater. d. PI (A) #DIV/0! PI (B) #DIV/0! Profitability index criterion implies accept #DIV/0! because its PI is larger. e. The only decision rule that can rank mutually exclusive projects is NPV, therefore you should accept Project B...
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Student_EOC_Chapter_08 - Input area Annual cash flows A B...

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