Economics Homework (Cash flow,IRR, discounting ect)

Sep 19th, 2015
Anonymous
Category:
Other
Price: $15 USD

Question description

I usually try to not post whole homework assignments, but I have no time this week. Please show your work for the below problem. Mid-year discounting means you recieve payment in the middle of the year. Help would be very much appreciated 

----------------------

1.  (45 Points) After years of working in the oil patch you have managed to scrape together $1 million you are willing to invest in a drilling venture.  Using all your knowledge gained from years of experience you have made the following estimate of operating income and investment amounts and timing. 

a.  (5 points) What is the maximum amount of money you expect to have to invest in this deal and when will that happen?

b.  (5 points) When do you anticipate payout will occur? 

c.  (5 points) Plot the cumulative net cash flow curve.

d.  (5 points) What is the undiscounted return on investment (ROI) for the project? 

e.  (5 points) What is the undiscounted profit/investment ratio (P:I) where profit = net cash flow?

f.  (5 points) What is the net present value at 15%/annum of the net cash flow for the project if all cash flow occurs at the middle of the year?

g.  (5 points) Plot the Discounted Cumulative Cash Flow curve for the project assuming all cash flows occur at the end of the year using an interest rate of 5%/annum. 

h.  (5 points) What is the discounted payout time at 5%? (from part g)

i.  (5 points) Calculate the internal rate of return (IRR) for the project assuming mid-year discounting.

Year

Oper Income M$

Invest $M

0

20

1

0

80

2

50

500

3

140

100

4

126

5

113

6

102

7

92

8

83

9

75

10

68


Tutor Answer

(Top Tutor) lizamgaspar
School: Duke University

Studypool has helped 1,244,100 students

Review from student
Anonymous
" Goes above and beyond expectations ! "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1820 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors