Using a 4.4% discount rate, calculate the Net Present Value, Payback, Profitability Index and IRR

 

1.  Risk & Return and the CAPM.

Based on the following information, calculate the required return based on the CAPM:
Risk Free Rate = 3.75%
Market Return =10%
Beta = 1.32

 

 

2.  (Part 1)
Using a 4.4% discount rate, calculate the Net Present Value, Payback, Profitability Index and IRR for each of the investment projects below (note, the inflows are for each year). Based on your calculations rank the projects and support you answer.

 

Project 1
Initial Invest= $505,000, Cash inflows of $105,000 for years 1-5 and $50,000 for years 6-10

 

Project 2
Initial Invest= $1,100,000, Cash inflows of $420,000 for years 1-3, $0 for years 4-7 and $250,000 for years 8-10.
Project 3
Initial Invest= $840,000, Cash inflows of $300,000 for years 1-5, $0 for years 6-9 and $100,000 for year 10.

 

 

 

2. (Part 2)
Assuming a budget of $1,200,000 what are your recommendations for the three projects in the above problem. Explain.

Assuming a budget of $2,000,000 what are your recommendations for the above problem? Explain.

 

 

3.Future value of single sum problem.

You put $1,000 in an investment account today which will earn 7% over the next 20 years, what is the future value?

 

 

 

Are you Looking for Quality and Plagiarism-Free Assignment Help? Get Trusted Help From the Most Skilled Writers at Homeworkmaven.com. Hire Your Personal Writer Today and Keep Up Your GPA this Semester.
275 words per page

You essay will be 275 words per page. Tell your writer how many words you need, or the pages.

12 pt Times New Roman

Unless otherwise stated, we use 12pt Arial/Times New Roman as the font for your paper.

Double line spacing

Your essay will have double spaced text. View our sample essays.

Any citation style

APA, MLA, Chicago/Turabian, Harvard, our writers are experts at formatting.

We Accept
Image 3