Ch5 Solutions

Ch5 Solutions - Problem#1 1 2 3 Project A-10000 6500 4000...

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Unformatted text preview: Problem #1 1 2 3 Project A-10000 6500 4000 1800 Cummulative-10000-3500 500 Payback period 1.875 PVs @ 15%-10000 5652 3025 1184 NPV (calc) ($140) NPV (formula) ($140) Project B-12000 7000 4000 5000 Cummulative-12000-5000-1000 4000 Payback period 2.200 PVs @ 15%-12000 6087 3025 3288 NPV (calc) $399 NPV (formula) $399 Problem #7 CF T0-190000 PV annuity N 7 i 15% PMT $(65,000) PV annuity $270,427 Profitability Index 1.42 Problem #11 Year DWF NSR Incremental $(750,000) $(2,100,000) $(1,350,000) 1 $310,000 $1,200,000 $890,000 2 $430,000 $760,000 $330,000 3 $330,000 $850,000 $520,000 IRR 19.83% 17.36% 15.78% NPV $89,796 $111,153 $35,611 a) Based on IRR, select DWF b) Based on NPV, select NSR c) The incremental IRR is higher than the discount rate, and NPV is positive, so take the larger project (proved by NSR NPV) Problem #14 Year Board CD-ROM Incremental $(600) $(1,900) $(1,300) 1 $700 $1,400 $700 2 $150 $900 $750 3 $100 $400 $300 Payback 0.86 1.56 1.80 NPV $235.5 $417.1 $181.6 IRR 42.4% 25.0% 18.8% accept CD-ROM Problem #16...
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Ch5 Solutions - Problem#1 1 2 3 Project A-10000 6500 4000...

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