Economics Homework (Cash flow,IRR, discounting ect)-Long question

FratBro23
Category:
Economics
Price: $15 USD

Question description

I need the work shown on these problems. You can excel, word or whatever you like to solve them. Thanks

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

1.  (20 Points) Your company is considering investing in three projects with projected Operating Income and Investment streams as shown in the following table. (10 points) Rank the three projects by NPV, ROI, IRR, and DROI assuming your investment opportunity rate is 20% and using mid-period discounting. 

a.  (5 points) If your company only has $6 million to invest in one of these projects (and plenty of small projects that will return 20% on average) which project do you recommend?

b.  (5 points) If your company finds some more money and now has $11 million to invest (and plenty of small projects that will return 20% on average) which project(s) do you recommend?

Year

Project A

Project B

Project C

Oper Inc M$

Invest M$

Oper Inc M$

Invest M$

Oper Inc M$

Invest M$

0

1000

1000

1000

1

0

1000

0

1000

0

1000

2

2000

3000

2000

2000

2000

3000

3

8000

0

4000

1000

3500

0

4

4000

0

3600

1000

3150

0

5

2000

0

3240

0

2835

0

6

1000

0

2916

0

2552

0

7

500

0

2624

0

2297

0

8

2362

0

2067

0

9

1860

0

10

1674

0

2.  (20 Points) You have a choice between the following two mutually exclusive projects.  Assume cash is received at the end of the year.

Net Cash Flow

Year

Project 'A'

Project 'B'

0

 $(40,000.00)

 $(40,000.00)

1

 $  30,000.00

 $  - 

2

 $  20,000.00

 $  - 

3

 $  10,000.00

 $  - 

4

 $  - 

 $  50,000.00

5

 $  - 

 $  40,000.00

a.  (5 points) Plot the present value profile for both projects on the same graph. (Use a range between 0-100%)

b.  (5 points) Which project would you recommend if your investment opportunity interest rate is 10%? What is the NPV for each project at this rate?

c.  (5 points) Which project would you recommend if your investment opportunity interest rate is 20% what is the NPV for each project at this rate?

d.  (5 points) What is the IRR for each project?


Studypool has helped 1,244,100 students
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1830 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