User Account

All Pages

Calculate the internal rate of return for both investments

Assignment Help Financial Accounting
Reference no: EM132554434

There are two mutually exclusive investment opportunities. The initial investment for both projects are $100,000. The first investment will generate $20,000 per year in perpetuity. The second project is expected to generate $15,000 for the first year and the amount will grow at 2% per year after that. The first cash flow for both investments start at the end of the first year.

Question 1: Calculate the internal rate of return for both investments.

Question 2: Assume the cost of capital is 7%, calculate the NPV for both investments.

  • Based on your answers in (a) and (b), which investment should you choose? Why?

Reference no: EM132554434

Questions Cloud

What is nyx holding period return on the investment : What is NYX holding period return on the investment? NYX Ltd bought an investment property last year for $750,000. XYZ also received $85,000
What factors would you beprioritize as you make decisions : Do you see yourself as the kind of person that will stay in the same job for a long time, perhaps into retirement, or as more of a job climber who will jump.
Prepare the shareholders fund section of the balance sheet : Prepare the Shareholders Fund Section of the Balance Sheet. How to Prepare journal entries to record the transactions in the general journal.
Explain the processes involved when drugs enter the brain : Explain the processes involved when drugs such as cocaine, marijuana, mescaline or alcohol enter the brain. You must write a 250-350 words well-written essay.
Calculate the internal rate of return for both investments : Calculate the internal rate of return for both investments. Assume the cost of capital is 7%, calculate the NPV for both investments.
Which one of the statement hold true : Big basket has opening inventory of rupees 30 million.It show closing inventory at the end of the year as rupees 50 million which one of the statement hold true
List the major deficiencies in the audit : List the major deficiencies in the audit, and state why they took place. Graeme Brown, chartered accountant, has been the partner in charge of the audit
What is the average accounting rate of return : What is the average accounting rate of return for the new machinery? Assume the machine is purchased with all equity and the tax rate is 30%.
Explains data visualizations : Explains that data visualizations have very few universal rules. explain each of the three principles in your own words.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Which is the best report to print to provide the information

The manager wants to know the balance in each of the company's accounts. Which is the best report to print to provide this information.

  Determine the estimated residual value of the equipment

Determine the estimated residual value of the equipment. What is the amortizable cost of the equipment? Calculate depreciation expense for 2020

  Sufficient evidence to conclude the balance is fairly stated

Doug Stevens, CPA, is interested in testing the fairness of the ending inventory balance during the audit of Morris Co. Doug has relatively little experience using statistical sampling methods and, quite frankly, doesn't like to turn anything over to..

  What would happen to autonomous consumption

What would happen to autonomous consumption if household debt fell and the interest rate rose over the same time period? What would happen to autonomous consumption if real wealth increased and expectations of the future became more optimistic?

  Calculate the expected return for stocks

Calculate the standard deviation for Stocks A and B. Express your answers in percent with two decimals. Which stock is preferred? Why?

  Find which project has a higher net present value

If an investment project has a profitability index of 1.25, the project's ? which project higher net present value? Which project has a shorter payback period?

  How many trades must be made to break even

Use the Contribution margin ratio CVP formula to compute National breakeven in dollars. If the average trade leads to $1000 in revenue for National how many trades must be made to break even?

  How are foreign exchange gains and losses reported

How are foreign exchange gains and losses reported? Why do companies hedge? Why would some companies choose not to hedge?

  Prepare a statement of changes in equity for 2012

Prepare a statement of changes in equity for 2012. Additionally, describe what presentation differences there might be in the statement of stockholders' equity if McEquityCorporation reported using US GAAP.

  Find what is the accumulated sum of stream of payments

Find What is the accumulated sum of the stream of payments? $12,156 every year at the beginning of the year for 12 years, at 9.21 percent, compounded annually.

  Effective interest rate established by the market

Auerbach Inc. issued 4% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate esta..

  Under the accrual basis of accounting

Fox Auto sold merchandise to a customer for $3,000 on credit on March 10. The customer paid Fox Auto the                    amount due on March 31. Under the accrual basis of accounting, Fox Auto will recognize the revenue on March 31. The March 10th..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd