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  1.  
  2. Download: http://solutionzip.com/downloads/6-question-you-are-reviewing-a-profitable-investment-project-that-has-a-conventional-cash-flow-pattern/
  3. You are reviewing a profitable investment project that has a conventional cash flow pattern. Suppose that the cash flows for the project, initial outlay, and future after-tax cash flows all double, you would predict that
  4. 1. the IRR would increase? decrease? stay the same?
  5. 2. the NPV would increase? decrease? stay the same?ABC Corporation is considering an investment of €375 million with expected after-tax cash inflows of €115 million per year for seven years and an additional after-tax salvage value of €50 million in Year 7. The required rate of return is 10 percent.
  6. What is the investment’s
  7. 1. NPV?
  8. 2. IRR?
  9. 3. MIRR?
  10. 4. PI?
  11. 5. Payback Period?
  12. Projects 1 and 2 have similar outlays, although the patterns of future cash flows are different. The cash flows as well as the NPV and IRR for the two projects are shown below. For both projects, the required rate of return is 10 percent.Year CF for Project 1 CF for Project 2
  13. 0 $(50.00) $(50.00)
  14. 1 $20.00 $0
  15. 2 $20.00 $0
  16. 3 $20.00 $0
  17. 4 $20.00 $100.001. What is the NPV and IRR of the two projects?
  18. 2. If the two projects are mutually exclusive, what is the appropriate investment decision?
  19. 3. Would your answer change if the projects were independent?What is NPV, IRR, PI, MIRR of a project with the following cash flows if the discount rate is 14 percent?Year CF
  20. 0 -18000
  21. 1 5000
  22. 2 7500
  23. 3 8400
  24. 4 2100
  25. What is NPV, IRR, PI, MIRR of a project with the following cash flows if the discount rate is 14 percent?Year CF
  26. 0 -18000
  27. 1 5000
  28. 2 7500
  29. 3 8400
  30. 4 2100
  31. Project A has the following cash flows:
  32. Year CF
  33. 0 -40,000
  34. 1 8,000
  35. 2 14,000
  36. 3 13,000
  37. 4 12,000
  38. 5 11,000
  39. 6 10,000
  40. Project B has the following cash flows:
  41. Year CF
  42. 0 -20,000
  43. 1 7,000
  44. 2 13,000
  45. 3 12,000Assuming that the required rate is 12%, what is the Equivalent Annual Annuity (EAA) for the two projects? Based on the EAA, which project is better?
  46. Assuming that the required rate is 12%, what is the Equivalent Annual Annuity (EAA) for the two projects? Based on the EAA, which project is better?
  47.  
  48. Download: http://solutionzip.com/downloads/6-question-you-are-reviewing-a-profitable-investment-project-that-has-a-conventional-cash-flow-pattern/
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