Problems with the IRR method Aame Oscillators in considering an investment project that has the following her hususlah tow porton o Cash Flow Year 0 1 -480 793 1715 2. Calculate the project's NPV steach of the following discount es: 0%, %, 10% 20% 30% 40% 50% . What do the calculations tell you about the projects IRR? The IRR ruletes managers to invest a projects RR is greater than the cost of capital. Wone Oscillatore cost of capital is 1%, should the company copt or rejects Investment? e. Notice that this project's greatest NPVs come a very high discount rates. Can you provide an intelleclaration for that paten? Calculate the NPV at the following discount rates for his investment OS, 6%, 10%,20% 30% 40%, os The NPV at 0% i (Round to the nearest) The NPV at 5% is Round to the nearest cent) The NPV at 10% is (Round to the nearest cant) The NPV at 20% (Round to the nearest cent) The NPV 30% is $Round to the nearest cent) The NPV at 40% iRound to the nearest cent) The NEV 50% is $ (Round to the nearest cent) b. What do the calculations tell you about this project's IRR? (Select the best answer below) OA The calculations tell you this project has more than one IRR. OB. The calculations tell you that this project's IRR is negative OC. The calculations tell you this project's IRR is greater than 50% OD. The calculations tell you this project has no RR Click to select your answers d. The calculations tell you this projects IRR is greater than 50% OD. The calculations tell you this project has no IRR. The IRR rutes managers to invest if a project's IR is greater than the cost of capital. Wome Oscillatore cost of capital is should the company warrend this investment? (elect the best below) OA. There ways that the firm should not the investment if the RR is less the cost of capital. However, in cases with multiples, one may be great than the cost of capiw, while other is low. In such a station, not cow whether to accept or reject the project OB. The RR rule says that the firm should accept the investimenti e Reeds the cost of capital. However, in the one IRR may be greater than the cost of the other is lower. In such as not clear whether to ccept or reject the project OC. The IRR rule ways that the frm should cept the investment the IRR exceeds the cost of capital. However, in cams with millise may be greater than the cost of capital, while other is lower in such a wote project should always be accepted OD The RR e say that the from should accept the investment the Rescends the NPV. However, in cases with multiples, on 18 may be greater than the cost of all, while wotera ke chatten, the project should be accepted the NPV la prehrano c. Notice that this project's greatest NPV come at very high discount rates Can you provide an explanation for the pattern (Beete best we below) OA. The largest cash outlow (-6003) occurs in your other things equal, a change in the discount rate will have a great value when the ouifow or inflow occurfurther into the are O B. Win a 50% discount rate, for example, the present value of the 5-602.3 outflow is only - 17:46 (20.0% of the undiscounted out fowi. In contrast, with a discount representes - 2014/1.4 of the discounted outflow) OC. There is not intuitive explanation when there are multiples OD. A and provide an inutive explanation O Problems with the IRR method Aome Oscators is considering an investment project that has the following the cash flow pattern. Year Cash File 199 -400 793 -6923 171.5 Calculate the project's NPV each of the following discount rates: 0%, 6%, 10%,20% 30%, 40%, 50% What do the colonel you about this projects IR? The IRR rule is managers to invest a pro IRR is greater than the cost of capital. Acme Oscillors cost of capital is 8%, should the company wept or reject is investment? c. Notice that this projects PVs come a very high discount rates Can you provide minute plaation for at patient - Calculate the NPV at the following countries for this investment 0%, 0%, 10%,20% 30% 40% 50% The NPV 0 Round to the nearest cent.) The NVS Round to the newest cent) The NPV10 Pound to the nearest cant) The NPV 20% found to the newest cont) The NPV Pound to the nearest cent) The NPV Pound to the nearest cent) The NPV SOS Round to the nearest cant) b. What do the salvations will you about this projects the best answer below) O A The calculations tell you this project has more than one IRR OB. The calations tell you that this projects IRR is negative OC. The calcations tell you this project is greater than 50% OD The can tell you this project has no RR Click to select your answer MacBook Air 171.5 Calculate the projecte NPV atach of the flowing countries OK. 5%, 10%, 20% 30% 40% 50% . What do the clientell you about this proper IRR? The IRR rule to managers to reaprojecte IRR Ir than the cost of capital. Wome Onderwcost of capital is show the company accept or reject the best? Notice that the projects greatest NPV come very high discountries. Can you provide an Initive explanation for that per Oc. The calculation tell you the project is greater than 50% OD. The calculation tell you the project has no IRR. The IRR nutel managers to invest a projects is puter than the cost of optal. Aome Oscillators' cost of capital is should the company accept or reject the investment? (Select the best newer below.) OA The IRR v Mays that the firm should coept the investment the RR is less the cost of capital. However, in cases with multiples, one IRR may be greater than the cost of capital, while ander is lowe. In such a shton, ki not clear whether to accept or reject the project OB. The Rules that the fem should accept the investment of the IRR exceed the cost of capital. However, in cases with multiple is one IRR may be greater than the cost of capital, while another is lower is such astion, it is not clear whether to accept or reject the project OC. The IRR ways that the firm should coept the investimenti the IRR excede the cost of capital. However, in cases with multiple IRRs, one IRR may be greater than the cost of capital, while another is lower. In such a whion, the project should always be mccepted OD. The RR e says that the firm should accept the investment the IRR exceeds the NPV. However, in cases with multiples, one IRR may be greater than the cost of capital, while wother is lower. In such a shater, the project should be accepted the NPV is greater than a e. Notice that the project's greatest NPV's come a very high discount rates. Can you provide an initive explanation for that pattern? (Select the best answer below) O A The largest cash outlow (-602.3) curs in year 3. Other things la change in the discount rate will have a larger impact on present value when the outflow or infowoccurs further into the futur OR. With a 50% discount rule, for example, the present value of the 5-602.3 outlow is only - 178.46 (20.8% of the undiscounted out tow). In contrast, with a discount rate, presente - 520 2804 (0.4% of the undiscounted outflow) OC. There is not intve explanation when there are multiple IRS OD. Aand provide an intuitive explanation Chex to select your answers MacBook Air 8 FI 80 F3 BOD Fe > 4) FS 1 59 520 VA A * + # 3 $ 4 % 5 2 & 7 6 8 9 0 Il Q W E R T T Y U 0 P