Question 19 of 30 View Policies Current Attempt in Progress D -/0.35 Management of Ivanhoe, Inc., is considering switching to a new production technology. The cost of the required equipment will be $4,000,000. The discount rate is 12 percent. The cash flows that the firm expects the new technology to generate are as follows. Years CF 1-2 0 3-5 $855,000 6-9 $1,490,000 a. Compute the payback and discounted payback periods for the project. (Round answer to 2 decimal places, e.g. 15.25.) The payback for the project is years, and the discounted payback period is years b. What is the NPV for the project? Should the firm go ahead with the project? (Enter negative amounts using negative sign eg. -45.25. Do not round discount factors. Round intermediate calculations to O decimal places, e.g. 1,525 and final answer to 2 decimal places, e.g. 15.25.) The NPV of the project is $ , and using the NPV rule the project should be c. What is the IRR, and what would be the decision based on the IRR? (Round answer to 3 decimal places, e.g. 15.256%) The IRR of the project is %, and using the IRR rule the project should be eTextbook and Media Save for Later Using multiple attempts will impact your score. 20% score reduction after attempt 2 Search Attempts: 0 of 3 used Submit Answer
Question 19 of 30 View Policies Current Attempt in Progress D -/0.35 Management of Ivanhoe, Inc., is considering switching to a new production technology. The cost of the required equipment will be $4,000,000. The discount rate is 12 percent. The cash flows that the firm expects the new technology to generate are as follows. Years CF 1-2 0 3-5 $855,000 6-9 $1,490,000 a. Compute the payback and discounted payback periods for the project. (Round answer to 2 decimal places, e.g. 15.25.) The payback for the project is years, and the discounted payback period is years b. What is the NPV for the project? Should the firm go ahead with the project? (Enter negative amounts using negative sign eg. -45.25. Do not round discount factors. Round intermediate calculations to O decimal places, e.g. 1,525 and final answer to 2 decimal places, e.g. 15.25.) The NPV of the project is $ , and using the NPV rule the project should be c. What is the IRR, and what would be the decision based on the IRR? (Round answer to 3 decimal places, e.g. 15.256%) The IRR of the project is %, and using the IRR rule the project should be eTextbook and Media Save for Later Using multiple attempts will impact your score. 20% score reduction after attempt 2 Search Attempts: 0 of 3 used Submit Answer
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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Transcribed Image Text:Question 19 of 30
View Policies
Current Attempt in Progress
D
-/0.35
Management of Ivanhoe, Inc., is considering switching to a new production technology. The cost of the required equipment will be
$4,000,000. The discount rate is 12 percent. The cash flows that the firm expects the new technology to generate are as follows.
Years
CF
1-2
0
3-5
$855,000
6-9
$1,490,000
a. Compute the payback and discounted payback periods for the project. (Round answer to 2 decimal places, e.g. 15.25.)
The payback for the project is
years, and the discounted payback period is
years
b. What is the NPV for the project? Should the firm go ahead with the project? (Enter negative amounts using negative sign eg. -45.25. Do
not round discount factors. Round intermediate calculations to O decimal places, e.g. 1,525 and final answer to 2 decimal places, e.g. 15.25.)
The NPV of the project is $
, and using the NPV rule the project should be
c. What is the IRR, and what would be the decision based on the IRR? (Round answer to 3 decimal places, e.g. 15.256%)
The IRR of the project is
%, and using the IRR rule the project should be
eTextbook and Media
Save for Later
Using multiple attempts will impact your score.
20% score reduction after attempt 2
Search
Attempts: 0 of 3 used
Submit Answer
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