Problem 8-17, Strip Mining Inc.
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
Find the two IRRs for the mine, then compute the NPV at four other discount rates.
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Find the two IRRs for the mine, then compute the NPV at four other discount rates.
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Determine Marielle Machinery Works’s IRR and given a required return determine if it should it be accepted or rejected.
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Compute the IRR for two projects given two timelines, both timelines give you C0, C1, C2. Which project appears to be better using the IRR rule? Which project is truly best?
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Given a project with C0, C1, and C2, compute the NPV and determine whether or not you should proceed with the project.
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You are given C1, C2, C3, C4 and are asked to select the IRRs of the problem as well as compute the NPV at three different discount rates.
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Determine the profitability index for a project. You are given cash flows for years 1 and 2 and then for years 3 and 4.
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Calculate the profitability index for A and B and which project should you accept based on the profitability index rule. You are given C0, C1, and C2 for both projects.
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Compute the profitability index for each project and determine which projects should be undertaken given capital rationing and also without the capital rationing constraint.
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Calculate the NPV for projects A and B along with their profitability indexes. Determine which project is more attractive to a firm with unlimited funds and also determine which one is more attractive to a firm with limited funds.
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Determine the NPV if you insulate your office, the IRR of this investment, and the payback period of insulating your office and saving money each year.
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