Calculate internal rate of return, Finance Basics

Assignment Help:

1. Each project has RM 10,000, and the cost of capital for each project is 12%. The projects' expected cash flows are as follows:

Expected Net Cash Flows

YEAR

PROJECT A

PROJECT B

0

(10,000)

(10,000)

1

6,500

3,500

2

3,000

3,500

3

3,000

3,500

4

1,000

3,500

a)  Calculate each project's internal rate of return (IRR), and modified internal rate of return (MIRR).

b)  How might a change in the cost of capital produce a conflict between the NPV and IRR ranking of these two projects? Would this conflict exist if k were 5%

(Hint: Plot the NPV profiles)

2.  A 10 year, 12% semi annual coupon bond, with a par value of $1000, may be called in 4 years at a call price of $1060. The bond sells for $1100. (assume that the bond has just been issued)
1) What is the bond's yield to maturity?
2)What is the bonds current yield?
3)What is the capital gain or loss yield?
4)What is the bond's yield to call?


Related Discussions:- Calculate internal rate of return

Government - measuring business performance, Government - Measuring Busines...

Government - Measuring Business Performance Government The Government is interested particularly in utility companies as KPLC, KPTC and such will offers public services -

Collection policy, Collection Policy The firm's collection policy may ...

Collection Policy The firm's collection policy may affect also our study.  The higher the cost of collecting accounts obtainable the lower the bad debt losses.  Therefore the

Measuring business performance, Measuring Business Performance Defini...

Measuring Business Performance Definition Financial analysis is a process via that finance identifies the company's financial performances with comparing the entities in

IS-LM, After read all the available information carefully, prepare a two pa...

After read all the available information carefully, prepare a two page (double-spaced) essay and answer the following questions: Assume that we have the following data: C=100+0.50Y

What are the characteristics of an efficient market, What are the character...

What are the characteristics of an efficient market? The word market efficiency refers to the speed, ease, and cost of trading securities. In a well-organized market, securitie

Calculate total number of ordinary shares, Calculate total number of ordina...

Calculate total number of ordinary shares Example Company XYZ Ltd has sold 10,000 ordinary shares of Shs.30 as partly called up plus 20,000 Shs.45 preference shares, tha

Draw a bar chart, The construction of a highway is broken into 14 activitie...

The construction of a highway is broken into 14 activities as shown in the following table. Draw a bar chart of this construction project. Activity ID Desc

Optimal Capital Budgeting, Capital Corporation, which has a target capital ...

Capital Corporation, which has a target capital structure of 40 percent debt and 60 percent common equity, is evaluating an expansion project with an 8.5 percent IRR. The project c

E-Commerce, Ask question #Minimu• 1.What is an Auction? E Bay is a market l...

Ask question #Minimu• 1.What is an Auction? E Bay is a market leader in online auction sites. Discuss SWOT for E bay using your web sources?. 2.Why so many entrepreneurs drawn to

#toption, expression of underlying asset''s price at maturity T for lookbac...

expression of underlying asset''s price at maturity T for lookback option.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd