This is a short answer of work but it is due 11:00PM today.

See 321 Chapter 9_PART2 Homework_42015.docx

Text book Cornett: Select Chapters Finance: Applications & Theory 3rd Edition w/Connect Plus http://create.mheducation.com Chapter 9 PART 1 Homework is to be done in CONNECT as usual. Chapter 9 Homework PART 2 - 20 POINTS Due by 11pm, Monday 4/20/15 in the Laulima Dropbox Do not fully complete and submit until we go over IRR on 4/14/15. The ThisStuffIsNotBad Company is trying to decide whether or not to accept the following projects. Using the internal rate of return method (IRR), decide which ones may add value to the firm. These are independent projects. Therefore if they all are acceptable, you accept all of them. They are not competing projects. [Note: You may want to compute the NPV first to help find the IRR if not using a financial calculator.] SHOW ALL WORK FOR FULL CREDIT. REFER TO THE IRR LECTURE (4/14/15) FOR THE METHODS OF SOLVING FOR IRR. (8 pts) Project A: Estimated Cash Flows. Use 7% cost of capital if calculating NPV first. Year Project A 0 - $150,000 So initial cost is $150,000. 1 + 65,000 2 + 55,000 3 + 68,000 (5 pts) Project B: Initial cost of $175,000, followed by yearly, end-of-year cash flows of $55,000 for four years. (5 pts) Project C: Initial cost of $8,019, followed by yearly, end-of-year cash flows of $3,000 for three years. (2 pts) Which, if any, projects are acceptable? Text book : Cornett: Select Chapters Finance: Applications & Theory 3 rd Edition w/Connect Plus ISBN-10:1308108435 ISBN-13:9781308108438 EXTRA CREDIT Worth 5 points. The submitted assignment must be complete; no partial assignments will be graded. Due by 11pm Friday 4/24/15 IN THE LAULIMA DROPBOX :) On page 334 (Top of page) complete the Integrated Mini-case - Project Valuation. Evaluate the project using the Payback period, discounted payback period, NPV, and IRR. For each method, indicate whether the project would be accepted or rejected. Page 334 Integrated mini-case project Valuation Suppose your firm is considering investing in a project with the accompanying cash flows, that the required rate of return on projects of this risk class is 11 percent, and that eh maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively. Time: 5 Cash flow $81,200 0 -$175,000 1 -$65,800 2 $94,000 3 $41,000 4 $122,000 Using every one of the capital budgeting decision methods discussed in this chapter, evaluate this Project, indicating whether each decision rule would call for acceptance or rejection of the project