Q1) A project has cash flows of –$100, +$55, and +$60.50 in consecutive years starting from right now. What is the IRR of the Project? The table below shows the un-discounted cash flows of 5 projects...

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Q1) A project has cash flows of –$100, +$55, and +$60.50 in consecutive years starting from right now.  What is the IRR of the Project? 
The table below shows the un-discounted cash flows of 5 projects over 4 years. Use this following information to answer questions 2 through 6.  For all questions assume that the yearly discount rate is 9%.
Project 
Year 0
Year 1
Year 2
Year 3
Year 4
A
-$1,000
$300
$500
$500
$600
B
-$1,000
$150
$200
$1,000
$1,200
C
-$2,000
$1,900
$200
$0
$0
D
-$200
$300
$0
$0
$0
E
-$200
$300
$0
-$100
$0
Q2) If the projects are mutually exclusive which project do you accept?
Q3) Based on your answer from question 2, what is that project's NPV.
Q4) If the projects were not mutually exclusive and you had unlimited money, which projects would you accept? 
Q5) Based on your answer from question 4, select the project that has the highest IRR, what is that projects IRR?
Q6) If you are interested in selecting the project(s) with the highest Profitability Index which project(s) would you select.  This question may have multiple answer.
Q7) Provide a brief explanation on the issues on the Pros and Cons of using IRR and Profitability Index to make decision on investment opportunities.
Answered 1 days AfterMay 06, 2021

Solution

Harshit Agarwal answered on May 08 2021
27 Votes

Question 1
Out Flow = 100
Inflow = 5 in year 1 and 60.50 in year 2
Year
0
1
2
CF
-100
55
60.5
IRR =
10.00%


NPV...

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