Question
i need seven question answers here each one related to other. if you need me post the same question for 7 times i will do
i need seven question answers here each one related to other. if you need me post the same question for 7 times i will do that.
SHOW ALLYOUR WORK IUNCLUDING INPUTS, OUTPUTS AND FINAL ANSWERS for full credit.
Use the following information to answer Problems #1-2.
SHOW ALLYOUR WORK IUNCLUDING INPUTS, OUTPUTS AND FINAL ANSWERS for full credit.
National Inc. is considering Project A . Cash flows for Project A are as follows:
An initial outlay or cost of $15,000 at time 0. No cash flows in year 1 and year 2. In year 3, 4, and 5, positive cash flows equal $10,000, $20,000, and $30,000 respectively.
What is the internal rate of return (IRR) for this project? ___________
Assume the wacc = 6% and the Project is independent of other projects. Will you accept or reject this project?
What is the NPV of the project should the wacc rise to equal the IRR in part A?_____________
SHOW ALLYOUR WORK IUNCLUDING INPUTS, OUTPUTS AND FINAL ANSWERS
National Inc. is considering Project B . Cash flows for Project B are as follows:
An initial outlay or cost of $10,000 at time 0 and an additional outlay or cost of -5,000 in Year 1. Positive cash flows are expected to start in year 1 and continue until Year 5.
The positive cash flows are estimated as follows:
|
| Positive cash flows |
| Year 1 | 2,500 |
| Year 2 | 10,000 |
| Year 3 | 10,000 |
| Year 4 | 12,000 |
| Year 5 | 7,000 |
Are the net cash flows (positive and negative) normal or nonnormal cash flows?________________Explain your answer.
What is the NPV of Project B if wacc = 10%?__________
Will you accept or reject Project B?__________
What is the NPV of Project A given in #1 if the wacc =10%?________
If Project A and Project B are mutually exclusive, which project(s) would you accept based on the NPV method and a wacc of 10%?_________________Explain your answer(s). .
SHOW ALLYOUR WORK IUNCLUDING INPUTS, OUTPUTS AND FINAL ANSWERS
Given the following Cash Flows, complete the table below. What is the Payback Period? _______Assume you want your money back within 2 years. Would you accept this project? ____
| Year | Cash Flow | Cumulative |
| 0 | -12,000 |
|
| 1 | 0 |
|
| 2 | 10,000 |
|
| 3 | 20,000 |
|
| 4 | 30,000 |
|
SHOW ALLYOUR WORK IUNCLUDING INPUTS, OUTPUTS AND FINAL ANSWERS
Complete the table below. What is the Discounted Payback Period? _____Assume you want your money back within 2.5 years. Assume wacc=8%. Would you accept this project? _______
| Year | Cash Flow | PV Cash Flows | Cumulative |
| 0 | -12,000 |
|
|
| 1 | 0 |
|
|
| 2 | 10,000 |
|
|
| 3 | 20,000 |
|
|
| 4 | 30,000 |
|
|
SHOW ALL YOUR STEPS
SHOW ALLYOUR WORK IUNCLUDING INPUTS, OUTPUTS AND FINAL ANSWERS
A) Given the following Cash flows for Project C, calculate the Modified Internal Rate of Return (MIRR)? Assume the wacc is 12%. _________
Assume Project C is an independent project, would you accept or reject this project?
Project A
Year Cash Flow
-12,000
+6,000
-5,000
+12,000
+9,000
+10,000
SHOW ALLYOUR WORK IUNCLUDING INPUTS, OUTPUTS AND FINAL ANSWERS
A) Given the following Cash flows for Project D, calculate the Modified Internal Rate of Return (MIRR)?
Assume the wacc is 12%. _________Would you accept or reject this project?
Project B
Year Cash Flow
0 -350,000
- 60,000
105,000
200,000
400,000
200,000
-50,000
SHOW ALLYOUR WORK IUNCLUDING INPUTS, OUTPUTS AND FINAL ANSWERS
A) If Project C and Project D were mutually exclusive, which project(s) would you accept based on the MIRR and wacc = 12%? _________Briefly explain your answer.
B) List the advantages and disadvantages of the NPV method versus the MIRR method.
1. Net present value method
Pros
Provide present value of futures cash flows which helps in taking capital budgeting Decision. NPV method provide more accurate information about the project so is widely accepted method.
Cons
Future cash flow and discount rate is an assumption value which might be differ from actual value.
Modified internal rate of return method
Pros
It consider reinvestment rate and cost of capital to evaluate the project so provide better result than IRR method.
Cons
To calculated MIRR, it requires two additional information about reinvestment rate and cost of capital which is an assumed value.
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International Financial Management
Authors: Geert Bekaert, Robert J. Hodrick
1st Edition
0131163604, 9780131163607
