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
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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% $- $-
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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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This note was uploaded on 09/09/2011 for the course BUSINESS 300 taught by Professor N/a during the Spring '09 term at DeVry Chicago.

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

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