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Unformatted text preview: Problem #1 1 2 3 Project A10000 6500 4000 1800 Cummulative100003500 500 Payback period 1.875 PVs @ 15%10000 5652 3025 1184 NPV (calc) ($140) NPV (formula) ($140) Project B12000 7000 4000 5000 Cummulative1200050001000 4000 Payback period 2.200 PVs @ 15%12000 6087 3025 3288 NPV (calc) $399 NPV (formula) $399 Problem #7 CF T0190000 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 CDROM 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 CDROM Problem #16...
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This note was uploaded on 02/27/2012 for the course BUSI 407 taught by Professor Bowen during the Spring '11 term at UNC.
 Spring '11
 Bowen

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