Thursday 1 November 2012

Problem 1 Period Project A CF0 -100 Please turn in one sheet tab only in your homework this week, with CF1 50 these 4 problems answered in full. Add cosmetics as possible, CF2 40 and make sure to check your formulas and functions. CF3 40 CF4 15 RRR (Discount) 15% NPV Problem 2 Period Project A Project B CF0 -100 -100 CF1 50 70 CF2 70 75 CF3 40 10 RRR 10% 10% NPV Which Project would you choose, assuming they were mutually exclusive? I would choose project Would it make a difference if the required rate were 14%, instead of 10%? Project A Project B NPV @14%, I would choose Problem 3 CF0 -8900 CF1 2150 CF2 2150 CF3 2150 CF4 2150 CF5 2150 CF6 2150 CF7 2150 CF8 2150 CF9 2150 What RRR, or discount rate, would cause NPV to be 0? Please show how you came to that conclusion using the NPV function Problem 4 Period Project A Project B CF0 -50000 -100000 CF1 26000 14000 CF2 20000 18000 CF3 16000 22000 CF4 12000 26000 CF5 24000 CF6 19000 CF7 26000 CF8 40000 RRR 11.00% 11.00% NPV Assume these projects are mutually exclusive. Which project would you select based on NPV? Is this a fair comparison? Yes or No, and why or why not?

Problem 1











Period Project A









CF0 -100

Please turn in one sheet tab only in your homework this week, with

CF1 50

these 4 problems answered in full.  Add cosmetics as possible,   

CF2 40

and make sure to check your formulas and functions.     

CF3 40









CF4 15









RRR (Discount) 15%









NPV  




















Problem 2











Period Project A Project B








CF0 -100 -100








CF1 50 70








CF2 70 75








CF3 40 10








RRR 10% 10%








NPV    








Which Project would you choose, assuming they were mutually exclusive?    









I would choose project  




















Would it make a difference if the required rate were 14%, instead of 10%?







Project A Project B








NPV     





















@14%, I would choose  



















Problem 3











CF0 -8900









CF1 2150









CF2 2150









CF3 2150









CF4 2150









CF5 2150









CF6 2150









CF7 2150









CF8 2150









CF9 2150









What RRR, or discount rate, would cause NPV to be 0?  







Please show how you came to that conclusion using the NPV function


















Problem 4











Period Project A Project B  







CF0 -50000 -100000  







CF1 26000 14000  







CF2 20000 18000  







CF3 16000 22000  







CF4 12000 26000  







CF5   24000  







CF6   19000  







CF7   26000  







CF8   40000  







RRR 11.00% 11.00%  







NPV      







       







Assume these projects are mutually exclusive.      







Which project would you select based on NPV?    







Is this a fair comparison? Yes or No, and why or why not?  








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