## (Answered) Understanding Capital Budgeting Practice Problems

Part 1. Capital Budgeting Practice Problems;a Use expected cash flows;Year Cash flow;0 -\$400,000;1 \$100,000;2 \$120,000;3 \$850,000;Show the PV with the following discount rates: 0%, 2%, 6%, 11%;What is IRR with a cost of capital of 5%?;Plot the discount rate on a chart, show where graph intersects horizontal axis.;Describe what you see in the chart/graph.;b. Use expected cash flows;Year Cash flow;0 -\$815,000;1 \$141,000;2 \$320,000;3 \$440,000;Calculate the IRR.;Show the PV with the following discount rates: 1%, 4%, 10%, 18%;Plot the discount rate on a chart, show where graph intersects horizontal axis.;Describe what you see in the chart/graph.;c. What is the PV of a project requiring a \$4.2 million investment has a profitability index of 0.94?
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Understanding Capital Budgeting Practice Problems

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