two Project M $27,000 $9,000 59,000 $9,00059,000 $9,00 Project N .$81,000 $25,20
ID: 2796145 • Letter: T
Question
two Project M $27,000 $9,000 59,000 $9,00059,000 $9,00 Project N .$81,000 $25,200 $25,200 25,200 $25,200 $25,200 Project M Project N Calculate IRR for each project. Round your answers to two decimal places. Do not round your Intermediate calculations Project M Project N Calculate MIRR for each project. Round your answers to two decimal places. Do not round your intermediate calculations Project M Project N Calculate payback for each project. Round your answers to two decimal places. Do not round your intermediate Project M Project N years Project M Project N b. the n NPV and IRR? s there a conflictExplanation / Answer
a -1 calculation of the net present value project m 1 years 1 2 3 4 5 2 cash flows 9000 9000 9000 9000 9000 3 PVRF at 14 % 0.8772 0.7695 0.6750 0.5921 0.5194 4 present value cash flows ( 2 * 3 ) 7895 6925 6075 5329 4674 5 total present value 30898 6 initial cash outlay 27000 7 net present value ( 5 - 6 ) 3898 project n 1 years 1 2 3 4 5 2 cash flows 25200 25200 25200 25200 25200 3 PVRF at 14 % 0.8772 0.7695 0.6750 0.5921 0.5194 4 present value cash flows ( 2 * 3 ) 22105 19391 17009 14920 13088 5 total present value 86514 6 initial cash outlay 81000 7 net present value ( 5 - 6 ) 5514 project m 3898 project n 5514 a -2 calculation of the internal rate of return project m years 0 1 2 3 4 5 cash flows -27000 9000 9000 9000 9000 9000 internal rate of return using excel .=irr( cash flows from year 0 to 5 ) 19.86% project n years 0 1 2 3 4 5 cash flows -81000 25200 25200 25200 25200 25200 internal rate of return using excel .=irr( cash flows from year 0 to 5 ) 16.80% a - 3 calculation of the modified internal rate of return project m wacc rate 14% irr rate 19.86% years 0 1 2 3 4 5 cash flows -27000 9000 9000 9000 9000 9000 modifided internal rate of return using excel .=mirr(cash flows from year 0 to 5, irr rate , wacc rate ) 17.12% project n wacc rate 14% irr rate 16.80% years 0 1 2 3 4 5 cash flows -81000 25200 25200 25200 25200 25200 modifided internal rate of return using excel .=mirr(cash flows from year 0 to 5, irr rate , wacc rate ) 15.51% a - 4 calculation of the payback period project m years 1 2 3 4 5 cash flows 9000 9000 9000 9000 9000 cumulative cash flows 9000 18000 27000 36000 45000 payback period is the time required to collect the initial cash outlay payback period 3 years project n years 1 2 3 4 5 cash flows 25200 25200 25200 25200 25200 cumulative cash flows 25200 50400 75600 100800 126000 payback period is the time required to collect the initial cash outlay initial cash outlay 81000 cumulative cash flows till 3 rd year 75600 remaining cash flows to be collected in 4 th year 81000 - 75600 5400 time required to calculate the cash flows in 4 th year 5400 /25200 0.21 payback period 3 years + 0.21 years 3.21 years
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