B. D. G. 3 Question 1: COMPARING TWO PROJECTS UNSING NET PRESENT VALUE (NPV) 5 Project A 6 Required 7 Outflow 8 Inflow 9 Net Inflow Interest rate Year 0 Year 1 Year 2 Year 3 Year 5 Year 6 Total 15% ($700,000) $225,000 $225,000 (S700,000) $225,000 1,125,000.00 $425,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 10 NPV $54,234.90 11 12 13 Project B 14 Required 15%
B. D. G. 3 Question 1: COMPARING TWO PROJECTS UNSING NET PRESENT VALUE (NPV) 5 Project A 6 Required 7 Outflow 8 Inflow 9 Net Inflow Interest rate Year 0 Year 1 Year 2 Year 3 Year 5 Year 6 Total 15% ($700,000) $225,000 $225,000 (S700,000) $225,000 1,125,000.00 $425,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 10 NPV $54,234.90 11 12 13 Project B 14 Required 15%
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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Question
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133
A
B.
C.
D
G
1.
3 Question 1:
COMPARING TWO PROJECTS UNSING NET PRESENT VALUE (NPV)
4.
5 Project A
6 Required
7 Outflow
8 Inflow
9 Net Inflow
10 NPV
Interest rate
Year 0
Year 1
Year 2
Year 3
Year 5
Year 6
Total
15%
(S700,000)
$225,000 1,125,000.00
$425,000
($700,000)
$225,000
$225,000
$225,000
$225,000
$225,000
$225,000
$225,000
$225,000
$225,000
$54,234.90
11
12
13 Project B
14 Required
15 Outflow
16 Inflow
17 Net Inflow
18 NPV
15%
(5400,000)
$550,000
$150,000
(S400,000)
$110,000
$110,000
$110,000
$110,000
$110,000
$110,000
$110,000
$110,000
$110,000
$110,000
(S31,262.94)
19
Based on the information above, identify which project (Project A or B) should be accepted? Explain why. By
changing the figures in the excel template (above), assume the interest rate for Project A fell to 13%, and Cash
Questions: outflow (The Initlal investment) was $950,000, Cash Inflows was $350,000 per annum for the 6 years, and Net
inflows was also $250,000. For Project B, assume interest rate also fell to 13% but Cash outflow, Inflow and Net
Inflows remain the same. What Is the new NPV for each of the project? Would you receommend that any of these
Answer
20
Sheet1
DesOy
Type here to search](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa7967bc9-4963-4775-8217-139be4a52de0%2Fdae2d529-d48b-4b41-85e5-4806f8e2b406%2Fsi22izw_processed.jpeg&w=3840&q=75)
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133
A
B.
C.
D
G
1.
3 Question 1:
COMPARING TWO PROJECTS UNSING NET PRESENT VALUE (NPV)
4.
5 Project A
6 Required
7 Outflow
8 Inflow
9 Net Inflow
10 NPV
Interest rate
Year 0
Year 1
Year 2
Year 3
Year 5
Year 6
Total
15%
(S700,000)
$225,000 1,125,000.00
$425,000
($700,000)
$225,000
$225,000
$225,000
$225,000
$225,000
$225,000
$225,000
$225,000
$225,000
$54,234.90
11
12
13 Project B
14 Required
15 Outflow
16 Inflow
17 Net Inflow
18 NPV
15%
(5400,000)
$550,000
$150,000
(S400,000)
$110,000
$110,000
$110,000
$110,000
$110,000
$110,000
$110,000
$110,000
$110,000
$110,000
(S31,262.94)
19
Based on the information above, identify which project (Project A or B) should be accepted? Explain why. By
changing the figures in the excel template (above), assume the interest rate for Project A fell to 13%, and Cash
Questions: outflow (The Initlal investment) was $950,000, Cash Inflows was $350,000 per annum for the 6 years, and Net
inflows was also $250,000. For Project B, assume interest rate also fell to 13% but Cash outflow, Inflow and Net
Inflows remain the same. What Is the new NPV for each of the project? Would you receommend that any of these
Answer
20
Sheet1
DesOy
Type here to search
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