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linda_us, Master's Degree
Category: Multiple Problems
Satisfied Customers: 7137
Experience:  Business Analyst and Solution Consultant with over 9 years of experience.
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# Problem 1Suppose a company is considering two independent

### Resolved Question:

for Linda

Problem 1

Suppose a company is considering two independent projects, Project A and Project B.  The cash outlay for Project A is \$14,000. The cash outlay for Project B is \$20,000. The company’s cost of capital is 12%. The following table shows the after-tax cash flows.  For each project, compute the NPV, the IRR, the MIRR, and indicate the accept/reject decision.

 Year Project A Project B 1 \$4800 \$6700 2 \$4800 \$6700 3 \$4800 \$6700 4 \$4800 \$6700

Problem 2

What is the internal rate of return for a project that has a net investment of \$60,000 and the following net cash flows: Year 1 = \$15,000; Year 2 = \$20,000; Year 3 = \$25,000; Year 4 = \$30,000?

Problem 3

A CFO is considering a project that has the following cash flow and WACC data.  What is the project's MIRR?  Note that a project's projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.  The firm’s WACC is 10%.

Project A

Year                 Cash Flow

0                    -\$800

1                        350

2                         350

3                         350

Problem 4

A company is faced with two independent investment opportunities.  The corporation has an investment policy which requires acceptable projects to recover all costs within 3 years. The corporation uses the discounted payback method to assess potential projects and utilizes a discount rate of 10 percent.  The cash flows for the two projects are:

Project A                 Project B

Year                    Cash Flow               Cash Flow

0                         -\$100,000                     -\$80,000

1                            40,000                          50,000

2                            40,000                          20,000

3                            40,000                          30,000

4                            30,000                               0

Which is the discounted payback for each project?

Problem 5

What is the internal rate of return for a project that has a net investment of \$75,000 and the following net cash flows: Year 1 = \$15,000; Year 2 = \$20,000; Year 3 = \$25,000; Year 4 = \$30,000?

Submitted: 1 year ago.
Category: Multiple Problems
Expert:  linda_us replied 1 year ago.
Customer: replied 1 year ago.

today

Expert:  linda_us replied 1 year ago.
I will post the solution in few hours.
Customer: replied 1 year ago.

do you have an update?

Expert:  linda_us replied 1 year ago.
Sorry I had issue with my system. I am in the middle for arranging another system.

Will update you in 30 minutes.
Expert:  linda_us replied 1 year ago.
I got another system will post the solution by 10 :-)

Really sorry for the delay.
Expert:  linda_us replied 1 year ago.

https://app.box.com/s/tm6r574495yyjebqw4j0

linda_us, Master's Degree
Satisfied Customers: 7137
Experience: Business Analyst and Solution Consultant with over 9 years of experience.

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