Fair. The Bratcher Incorporated is considering sponsoring a paw project\'s cash

Question

Fair. The Bratcher Incorporated is considering sponsoring a paw project's cash flows are as follkows: sponsoring a pavilion at the upcoming Worlds Year (SI.I million) +5 million (4.9 million) 441 Which of the following statements is most CORRECT a. The project should be accepted if the firm's cost of capital is more than 42.967105 percent. . The project should be accepted if the firm's cost of capital is between 42.967105 and 211.578350 percent c The project should be accepted if the firm's cost of capital is between 42.967105 and 301.856724 percent. The project should be accepted if the cost of capital is in the relevant range. d. uld be accepted if the cost of capital is between 0 and 42.967105 percent Sheyanne invested in a project that has the following quarterly cash flows over the next 1.5 years. If interest is compounded quarterly, what is the effective annual rate of return for this project? (Round to 6 decimal places throughout 0.25 0.50 0.75 1.25 1.50 (900)95 190 285 140 220 360 45.18 percent 39.07 percent 21.16 percent

Explanation / Answer

Answer is The Project Should be accepted of the firms cost of capital is between 0 and 42.967105%

At 42.967105% NPV is Zero

Hence project is acceptable only when cost of capital is less then 42.967105% if cost of capital is more tha 42.9767105% NPV will be negative hence not acceptable

2

annual IRR = (1+r)^4 - 1

=+(1+9.77%)^4-1

=45.18%

Cash Flow PV factor 42.967105 Present value -1100000 1 -11,00,000.00 5000000 0.6994616    34,97,308.00 -4900000 0.48924653 -23,97,308.00 NPV                     0.00

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.