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Price: $5.00

- From: Business,
- Posted on: Wed 07 Nov, 2012
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Request Description

Problem 1: Complete the table, and tell me whether we accept or reject. | |||||||

Period | Project A | ||||||

CF0 | -100 | ||||||

CF1 | 50 | ||||||

CF2 | 40 | ||||||

CF3 | 40 | ||||||

CF4 | 15 | ||||||

RRR (Discount) | 15% | ||||||

NPV | |||||||

IRR | |||||||

Problem 2: Complete the table, tell me which project you'd select, and why. | |||||||

Period | Project A | Project B | |||||

CF0 | -100 | -100 | |||||

CF1 | 50 | 70 | |||||

CF2 | 70 | 75 | |||||

CF3 | 40 | 10 | |||||

RRR | 10% | 10% | |||||

NPV | |||||||

IRR | |||||||

Problem 3: Find the MIRR | |||||||

Ehrmann Data Systems is considering a project that has the following cash flow and WACC data. What is the project's MIRR? | |||||||

Do we accept or reject, and why? | |||||||

WACC: 10.00% | |||||||

Year | 0 | 1 | 2 | 3 | |||

Cash flows | ($1,000) | $450 | $450 | $450 | |||

Problem 4: | |||||||

Nast Inc. is considering Projects S and L, whose cash flows are shown below. | |||||||

These projects are mutually exclusive, equally risky, and not repeatable. | |||||||

If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? | |||||||

WACC: 8.75% | |||||||

Year | 0 | 1 | 2 | 3 | 4 | ||

CF_{S} |
($1,100) | $375 | $375 | $375 | $375 | ||

CF_{L} |
($2,200) | $725 | $725 | $725 | $725 | ||

Problem 5: | |||||||

Stern Associates is considering a project that has the following cash flow data. | |||||||

Calculate the NPV and MIRR if the RRR is 9%, and provide a recommendation on whether to accept or reject. | |||||||

Year | 0 | 1 | 2 | 3 | 4 | 5 | |

Cash flows | ($1,100) | $400 | $510 | ($320) | $530 | $340 |

Solution Description

Problem 1: Complete the table, and tell me whether we accept or reject. | ||||||||

Period | Project A | |||||||

CF0 | -100 | |||||||

CF1 | 50 | Accept the project | ||||||

CF2 | 40 | |||||||

CF3 | 40 | |||||||

CF4 | 15 | |||||||

RRR (Discount) | 15% | &n |