solve in detail
06.01-PR005 WP Nu Things, Inc., is considering an investment in a business venture with the fol- lowing anticipated cash flow results: EOY Cash EOY Cash EOY Cash Flow Flow Flow O -$70,000 7 14,000 14 7,000 20,000 8 13,000 15 6,000 2 19,000 9 12,000 16 5,000 3 18,000 10 11,000 17 4,000 4 17,000 11 10,000 18 3,000 UI 16,000 12 9,000 19 2,000 6 15,000 13 8,000 20 1,000 Assume MARR is 20% per year. Based on an inter- nal rate of return analysis (1) determine the invest- ment's worth; (2) state whether or not your results indicate the investment should be undertaken; and (3) state the decision rule you used to arrive at this conclusion.06.01-PR005 WP Nu Things, Inc., is considering an investment in a business venture with the fol- lowing anticipated cash flow results: EOY Cash EOY Cash EOY Cash Flow Flow Flow O -$70,000 7 14,000 14 7,000 20,000 8 13,000 15 6,000 2 19,000 9 12,000 16 5,000 3 18,000 10 11,000 17 4,000 4 17,000 11 10,000 18 3,000 UI 16,000 12 9,000 19 2,000 6 15,000 13 8,000 20 1,000 Assume MARR is 20% per year. Based on an inter- nal rate of return analysis (1) determine the invest- ment's worth; (2) state whether or not your results indicate the investment should be undertaken; and (3) state the decision rule you used to arrive at this conclusion.06.01-PR031 WP Consider the following cash flow profile and assume MARR is 10%/ yr. EOY NCF EOY NCF O -$100 4 -$950 $800 5 $700 2 $750 6 -$800 w $900 a. What does Descartes' rule of signs tell us about the IRR(s) of this project? b. What does Norstrom's criterion tell us about the IRR(s) of this project? c. Determine the IRR(s) for this project. d. Is this project economically attractive?06.01-PR031 WP Consider the following cash flow profile and assume MARR is 10%/ yr. EOY NCF EOY NCF O -$100 4 -$950 $800 5 $700 2 $750 6 -$800 w $900 a. What does Descartes' rule of signs tell us about the IRR(s) of this project? b. What does Norstrom's criterion tell us about the IRR(s) of this project? c. Determine the IRR(s) for this project. d. Is this project economically attractive?06.01-PR037 ZeeZee's Construction Company has the opportunity to select one of four projects (A, B, C, or D) or the null (Do Nothing) alternative. Each project requires a single initial investment and has an internal rate of return as shown in the first table below. The second table shows the incremental IRR(s) for pairwise comparisons between each project and all other projects with a smaller initial investment. Investments and IRR(s) Project Initial Investment IRR Null $0 0.0% A $600,000 44.0% B $800,000 40.0% C $470,000 39.2% D $540,000 36.0% Incremental IRR(s) Increment Incremental IRR B-A 28.3% B-D 48.8% B-C 41.4% A-D 116.5% A-C 61.0% D-C 18.4%06.01-PR037 ZeeZee's Construction Company has the opportunity to select one of four projects (A, B, C, or D) or the null (Do Nothing) alternative. Each project requires a single initial investment and has an internal rate of return as shown in the first table below. The second table shows the incremental IRR(s) for pairwise comparisons between each project and all other projects with a smaller initial investment. Investments and IRR(s) Project Initial Investment IRR Null $0 0.0% A $600,000 44.0% B $800,000 40.0% C $470,000 39.2% D $540,000 36.0% Incremental IRR(s) Increment Incremental IRR B-A 28.3% B-D 48.8% B-C 41.4% A-D 116.5% A-C 61.0% D-C 18.4%IRR(s) for pairwise comparisons between each project and all other projects with a smaller initial + investment. Investments and IRR(s) Project Initial Investment IRR Null $0 0.0% A $600,000 44.0% B $800,000 40.0% C $470,000 39.2% D $540,000 36.0% Incremental IRR(s) Increment Incremental IRR B-A 28.3% B-D 48.8% B-C 41.4% A-D 116.5% A-C 61.0% D-C 18.4% For each of the values of MARR below indicate which project is preferred based on an incremental IRR analysis. a. MARR = 50%. b. MARR = 41%. C. MARR = 25%.IRR(s) for pairwise comparisons between each project and all other projects with a smaller initial + investment. Investments and IRR(s) Project Initial Investment IRR Null $0 0.0% A $600,000 44.0% B $800,000 40.0% C $470,000 39.2% D $540,000 36.0% Incremental IRR(s) Increment Incremental IRR B-A 28.3% B-D 48.8% B-C 41.4% A-D 116.5% A-C 61.0% D-C 18.4% For each of the values of MARR below indicate which project is preferred based on an incremental IRR analysis. a. MARR = 50%. b. MARR = 41%. C. MARR = 25%
