Problem # 2 (3/10): A cash flow sequence has a disbursement of $15,000 today, followed by three receipts of $8,000 at the end of year one, two and three. A final disbursement of $3,000 occurred at the end of year 4. The MARR is 10%. Check if this cash flow sequence is "simple"? If the cash flow sequence is 'simple', calculate the IRR for this project. If the cash flow sequence is NOT 'simple', calculate the approximate-ERR for this project. Decide whether the project should be accepted or not.

Problem # 2 (3/10): A cash flow sequence has a disbursement of $15,000 today, followed by three receipts of $8,000 at the end of year one, two and three. A final disbursement of $3,000 occurred at the end of year 4. The MARR is 10%. Check if this cash flow sequence is "simple"? If the cash flow sequence is 'simple', calculate the IRR for this project. If the cash flow sequence is NOT 'simple', calculate the approximate-ERR for this project. Decide whether the project should be accepted or not.

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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Similar questions

What is the present value of a stream of 5 end-of-year annual cash receipts of $1,000 given a discount rate of 13%? (Round your final answers to 2 decimal places.) a. Use the appropriate table (Appendix C: Table 1, Table 2) to answer the above question. b. Use the appropriate built-in function in Excel to answer the above question.
1. Consider the following cash flow payments: An income of $2000 at the end of year 2, an income of $5000 at the end of year 4, an expense of $3000 at the end of year 8, and a final income of $4000 at the end of year 10. (a) Draw the cash flow diagram for the cash flow payments. (b) Write an expression: what is the present equivalent value of these payments over the 10-year period assuming an interest rate of 10% per year. Just write down the expression like "e.g. P = 1,000 (P/F, 4%, 10) + 2,500 (P/A, 4%, 5)-4,000". You don't need to calculate the final numerical answer. (Hint: you can write out the present equivalent value for each cash flow, and then sum them up.)
What is the payback period for the following set of cash flows? (Round your answer to 2 decimal places, e.g., 32.16.) Year Cash Flow 0 –$ 4,700 1 1,100 2 1,300 3 2,125 4 1,200
Problem #1: For the following cash flows, (receipt of 10,000 at t=0; payment of 15,000 at t=1; receipt of 12,000 at t=2; and receipt of 12,000 at t-6), various interest rates are applied: 3% for year 1; 4% for year 2, 5% for years 3 and 4, and 6% for years 5 and 6. Find the equivalent net value at t=5, i.e., Fs=? 10,000 12,000 3% 4% 5% 0 1 2 I 15,000 F₂-? I 12,000 5% 6% 6% m
Consider the following cash flows: Year 0 1 2 3 4 Cash Flow -$ 7,700 1,900 3,000 2,300 1,700 What is the payback period for the cash flows? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Payback period years
We want to determine the discount rate that sets the present value of the future net cash flow. Suppose that we start with a 15% discount rate and calculate the present value of the cash flow stream. Initial Cash Outflow is $1,00,000. Find IRR. Year Net Cash flows 1 $34,432 2 $39,530 3 $39,359 4 $32,219
What is the payback period for the following set of cash flows? (Round your answer to 2 decimal places, e.g., 32.16.) Cash Year Flow $5,500 1 1,275 1,475 1,875 1,375 3 4 Payback period years
DIRECTIONS: Solve the following problems neatly and legibly. Draw the necessary cash flow diagrams. Box your final answer. PROBLEM 1: Determine the present worth of an annual payment of P 4500.00 : 1. If made at the beginning of the year for 12 years at 8% compounded annually.2. If made at the end of each month for 5 years at 4% compounded monthly.3. If 15 payments start at the end of year 4 at 6% compounded annually
For each of the following annuities, calculate the annual cash flow. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Cash Flow Present Value Years Interest Rate $ 33,100 6 10 % 30,700 8 8 $ 170,000 17 13 $ 243,300 24 12 %24
There is no interperiod compounding for the transactions shown. Your manager asks you to determine the amount of money in the account at the end of year 3 at an interest rate of 8% per year compounded semiannually. Draw the cash flow diagram and solve using (a) tabulated factors, and (b) a spreadsheet.
Based on the following cash flows (t=0 to t=5), calculate the Precise(Exact) ERR. Assume the MARR is at 10%. t=0 receipt of $20,000. t=1 disbursement of $15,000. t=2 disbursement of $10,000. t=3 no cash flow t=4 no cash flow t=5 receipt of $2,400. 2.82% 6.78% 9.26% 4.17% 1.43%
For each of the following annuities, calculate the annual cash flow: Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Cash Flow Present Value 31,600 28,450 147,500 216,300 $ $ $ $ Years 6 8 12 16 Interest Rate 9 % 7 12 11

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