can you please help explain how to solve for IRR in order to get the answer that is written at the end 5) Matterhorn Mountain Gear is evaluating two projects with the following cash flows:Year0123Project X-$ 317,200147,200164,700129,800Project Y-$295,200137,850155,050120,800What interest rate will make the NPV for the projects equal?|=(-317,200-(-295,200)) + (147,200-137,850)/(1+ IRR) + (164,700-155,050) / (1 + 1 RR)² + (129, 800-120,800)/ (1 +1RR)³-0 = = 22,000 + 9,350 / (1+IRR) + 9,650/(1+ IRR)² +9,000/(1+IRR) ³IRR = .1319 or 13.19%

To solve for the interest rate that makes the Net Present Value (NPV) of the two projects equal,…

Answered: 5) Matterhorn Mountain Gear is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Matterhorn Mountain Gear is evaluating two projects with the following cash flows: Year Project X Project Y 0 −$ 316,200 −$ 293,450 1 147,700 138,100 2 165,200 155,300 3 130,300 121,050 What interest rate will make the NPV for the projects equal?
17. Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B)0 −$291,000 −$41,6001 37,000 20,0002 55,000 17,6003 55,000 17,2004 366,000 14,000 a) What is the Internal Rate of Return (IRR) for each of these projects? b) Using the IRR decision rule, which project should the company accept? c) If the required return is 11 percent, what is the Net Present Value (NV) for each of these projects? d) Using the NPV decision rule, which project should the company accept? e) Why do you think the NPV and IRR rules do not agree on same project approval/rejection direction?
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$29,000 −$29000 1 14,400 4,300 2 12,300 9,800 3 9,200 15,200 4 5,100 16,800 a) What is the Internal Rate of Return (IRR) for each of these projects? b) Using the IRR decision rule, which project should the company accept? c) If the required return is 11 percent, what is the Net Present Value (NV) for each of these projects? d) Using the NPV decision rule, which project should the company accept? e) Why do you think the NPV and IRR rules do not agree on same project approval/rejection direction?
Filter Corp. has a project available with the following cash flows: Year Cash Flow 0 −$15,900 1 5,300 2 6,600 3 6,000 4 4,400 What is the project's IRR?
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Consider the cash flows for the investment projects given in Table. Assume that the MARR = 10%. (a) Suppose A, B, and C are mutually exclusive projects. Which project would be selected on the basis of the IRR criterion (b) Assume that projects C and È are mutually exclusive. Using the IRR criterion, which Project would you select? Net Cash Flow A В C D E -4,250 3,200 2,850 -4,250 1,500 3,250 1,600 1,200 -4,250 2,850 -4,850 2,100 2,100 2,100 2,100 2,500 1 -835 2,900 1,050 500 2 -835 3 800 -835 4 300 -835
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Two projects being considered are mutually exclusive and have the following projected cash flows: Project AProject B YearCash FlowCash Flow 0-$50,000-$50,000 1 15,990 0 2 15,990 0 3 15,990 0 4 15,990 0 5 15,990 100,560 At what rate (approximately) do the NPV profiles of Projects A and B cross?
1. Consider the following two mutually exclusive projects, X and Y, and their cash flows information, Project X Y (a) (b) Year 0 ($2,600) ($3,100) Year 1 $1,000 $ 900 Cash Flows Year 2 $1,300 $1,500 Year 3 $ 800 $1,100 Year 4 $ 400 $ 800 Assume that the appropriate discount rate is 14%, calculate the Payback Period, the Modified IRR (McKinsey's approach) AND the Profitability Index for Project Y. State clearly the key piece of information that you need in order to make the correct investment recommendation on the two projects according to the Payback Period method. Given that Project X's IRR is 15.16%, which project should be chosen according to the IRR method? Precisely explain how you should construct the incremental project and its cash flows numerically. Precisely explain your final selection between these two mutually exclusive projects according to the incremental project (IRR) analysis.
K.Broni Company is considering two mutually exclusive investments. Project P and Project The expected cash flows of these projects are as follows: Year Project (P) Project (Q) ($) ($) 0 (1,000) (1,600) 1 (1,200) 200 2 (600) 400 3 (250) 600 4 2,000 800 5 4,000 100 (a) Which project would you choose if the cost of capital is 10 percent? 20 percent? (b) Critically examine the superiority and…
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The cash flows associated with an investment project are as follows: Project Y (200 000) 100 000 Year 100 000 120 000 110 000 The discount rate is 8 percent. What's the discount payback period of the projects? (compile a spreadsheet) Calculate NPV, PI of a projects Calculate IRR of a projects Should the firm accept the project? a) b) c) d) 01234

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