Reference no: EM13970008
1. Consider projects Alpha and Beta:
Project CF0 C01 C02 IRR(%)
Alpha -400,000 241,000 293,000 21
Beta -200,000 131,000 172,000 31
The opportunity cost of capital is 8%. Suppose the projects are mutually exclusive. Use the IRR rule to make the choice. (Hint: what is the incremental investment in Alpha?)
2. Some professionals believe firmly, even passionately, that ranking projects on IRR is OK if each project's cash flows can be reinvested at the project's IRR. They also say that the NPV rule "assumes that cash flows are reinvested at the opportunity cost of capital." Think carefully about these statements. Are they true? Are they helpful?
3. Calculate the payback, discounted payback, NPV, IRR, MIRR & profitability index for the following: CF0 = -2,000, C01 = 1,000, C02 = 1,000, C03 = 4,000, C04 = 1,000 & C05 = 1,000; the cost of capital is 10%.
4. You purchase a vehicle for $75,000 for your firm. Using IRS guidelines, set up a depreciation schedule on a MACRS and Straight-line basis. (Hint: IRS will set the time structure).
5. Respond to the following comments:
a. "I like the IRR rule. I can use it to rank projects without having to specify a discount rate."
b. I like the Payback rule. As long as the minimum payback period is short, the rule makes sure that the company takes no borderline projects. That reduces risk."
|
How much is the monthly repayment
: How much is the monthly repayment? ii. How much do Jack and Jill owe the bank immediately before making the 120th repayment?
|
|
Which method do you think would work best
: You are interested in nurses' attitudes toward EBP. Which method do you think would work best to obtain this information: a questionnaire, a face-to-face interview, or a group interview
|
|
How does management typically evolves in corporation
: How does strategic management typically evolves in a corporation
|
|
What is the total cost over the first year to invest in fund
: The commission on the purchase price is 3%, and the fund charges a 1% annual management fee and a $10 annual administrative charge. What is the total cost over the first year to invest in this fund?
|
|
Calculate the payback, discounted payback
: Calculate the payback, discounted payback, NPV, IRR, MIRR & profitability index for the following: CF0 = -2,000, C01 = 1,000, C02 = 1,000, C03 = 4,000, C04 = 1,000 & C05 = 1,000; the cost of capital is 10%.
|
|
Estimate the parameters of the empirical demand function
: Should you use the ordinary least-squares (OLS) method or the two-stage least-squares method (2SLS) method for estimating industry demand for rutabagas? Explain briefly -
|
|
What competitive advantage is it highlighting
: How does the McDonald's 2016 SuperBowl Commercial address the needs of their stakeholders? What competitive advantage is it highlighting
|
|
What risks or challenges might a financial manager encounter
: Review the Course Objectives, how will accomplishing these objectives support your success in financial management? What risks or challenges might a financial manager encounter if they have not mastered these objectives? Explain.
|
|
Analyze the key types of policies required for the delivery
: Defend or critique the primary alternative sources of healthcare funding in the United States - Analyze the key types of policies required for the delivery of a public health insurance program, and hypothesize their main effects on the achievement ..
|