978-0073382395 Chapter 9 Calculator Solutions

Type

Quiz

Book Title

Fundamentals of Corporate Finance Standard Edition 9th Edition

ISBN 13

978-0073382395

April 3, 2019

CHAPTER 9 B-171

While this may look like a MIRR calculation, it is not an MIRR, rather it is a standard IRR calculation.

Since the cash inflows are blocked by the government, they are not available to the company for a

period of one year. Thus, all we are doing is calculating the IRR based on when the cash flows actually

occur for the company.

Calculator Solutions

CFo –$34,000

C01 $16,000

F01 1

C02 $18,000

CFo –$34,000 CFo –$34,000

C01 $16,000 C01 $16,000

F01 1 F01 1

C02 $18,000 C02 $18,000

F02 1 F02 1

CFo –$138,000 CFo –$138,000 CFo –$138,000

C01 $28,500 C01 $28,500 C01 $28,500

F01 9 F01 9 F01 9

B-172 SOLUTIONS

10.

CFo –$19,500

C01 $9,800

F01 1

11.

CFo –$19,500 CFo –$19,500

C01 $9,800 C01 $9,800

F01 1 F01 1

C02 $10,300 C02 $10,300

F02 1 F02 1

C03 $8,600 C03 $8,600

F03 1 F03 1

I = 0% I = 10%

NPV CPT NPV CPT

CFo –$43,000 CFo –$43,000

C01 $23,000 C01 $23,000

F01 1 F01 1

C02 $17,900 C02 $17,900

F02 1 F02 1

C03 $12,400 C03 $12,400

F03 1 F03 1

C04 $9,400 C04 $9,400

F04 1 F04 1

IRR CPT I = 11%

20.44% NPV CPT

$7,507.61

CHAPTER 9 B-173

Project B

CFo –$43,000 CFo –$43,000

C01 $7,000 C01 $7,000

F01 1 F01 1

C02 $13,800 C02 $13,800

F02 1 F02 1

C03 $24,000 C03 $24,000

F03 1 F03 1

C04 $26,000 C04 $26,000

F04 1 F04 1

IRR CPT I = 11%

18.84% NPV CPT

$9,182.29

13. Project X

CFo –$15,000 CFo –$15,000 CFo –$15,000

C01 $8,150 C01 $8,150 C01 $8,150

F01 1 F01 1 F01 1

C02 $5,050 C02 $5,050 C02 $5,050

F02 1 F02 1 F02 1

C03 $6,800 C03 $6,800 C03 $6,800

F03 1 F03 1 F03 1

I = 0% I = 15% I = 25%

NPV CPT NPV CPT NPV CPT

$5,000.00 $376.59 –$1,766.40

B-174 SOLUTIONS

Project Y

CFo –$15,000 CFo –$15,000 CFo –$15,000

C01 $7,700 C01 $7,700 C01 $7,700

F01 1 F01 1 F01 1

C02 $5,150 C02 $5,150 C02 $5,150

F02 1 F02 1 F02 1

C03 $7,250 C03 $7,250 C03 $7,250

F03 1 F03 1 F03 1

14.

CFo –$45,000,000 CFo –$45,000,000

C01 $78,000,000 C01 $78,000,000

F01 1 F01 1

C02 –$14,000,000 C02 –$14,000,000

F02 1 F02 1

I = 10% IRR CPT

CHAPTER 9 B-175

15.

CFo $0 CFo $0 CFo $0

C01 $7,300 C01 $7,300 C01 $7,300

F01 1 F01 1 F01 1

C02 $6,900 C02 $6,900 C02 $6,900

F02 1 F02 1 F02 1

C03 $5,700 C03 $5,700 C03 $5,700

F03 1 F03 1 F03 1

I = 10% I = 15% I = 22%

NPV CPT NPV CPT NPV CPT

16. Project I

CFo $0 CFo –$53,000

C01 $27,000 C01 $27,000

F01 3 F01 3

I = 10% I = 10%

NPV CPT NPV CPT

$67,145.00 $14,145.00

PI = $67,145.00 / $53,000 = 1.267

Project II

CFo $0 CFo –$16,000

17.

CF(A) c. d. e.

Cfo –$300,000 CFo –$300,000 CFo $0

C01 $20,000 C01 $20,000 C01 $20,000

F01 1 F01 1 F01 1

C02 $50,000 C02 $50,000 C02 $50,000

F02 2 F02 2 F02 2