Self-Assessment HW6B (NPV)
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School
University of Maryland, University College *
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Course
330 7980
Subject
Finance
Date
Nov 24, 2024
Type
docx
Pages
7
Uploaded by Dogmom87
Question
1
Find
the
net
present
value
(NPV)
for
the
following
series
of
future
cash
flows,
assuming
the
company’s
cost
of
capital
is
11.27
percent.
The
initial
outlay
is
$511,874.
Year
1:
180,696
Year
2:
150,117
Year
3:
198,752
Year
4:
147,371
Year
5:
169,563
Round
the
answer
to
two
decimal
places.
Your
Answer:
111589.77]
Answer
W
Hide
Check
my
answer
Step
1:
Calculate
present
value
of
cash
flows
received
in
years
1-5
using
Excel
function
NPV.
(Formulas
-
Financial
-
NPV)
Enter:
Rate
11.27%
Value1
180696
Value2
150117
Value
3
198752
Value
4
147371
Value
5
169563
=NPV(11.27%,180696,150117,
198752,147371,169563)
=
$623,463.77
Step
2:
Calculate
NPV
of
the
project:
$623.463.77
-
$511,874
=
$111,589.77
Al
together:
=NPV(11.27%,180696,150117,
198752,147371,169563)
-
511,874
=
$111,589.77
File
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=NPV(11.27%,180696,150117,198752,147371,169563)
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=NPV/(11.27%,180696,150117,198752,147371,169563)-511874
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Question
2
Tall
Trees,
Inc.
is
using
the net
present
value
(NPV)
when
evaluating
projects.
You
have
to
find
the
NPV
for
the
company’s
project,
assuming
the
company’s
cost
of
capital
is
14.90
percent.
The
initial
outlay
for
the
project
is
$355.970.
The
project
will
produce
the
following
after-tax
cash
inflows
of
Year
1:
170,583
Year
2:
11,468
Year
3:
74,099
Year
4:
199,276
Round
the
answer
to
two
decimal
places.
Your
Answer:
638.82
Answer
Step
1:
Calculate
present
value
of
cash
flows
received
in
years
1-4
using
Excel
function
NPV.
(Formulas
-
Financial
-
NPV)
Enter:
Rate
14.90%
Value1
170583
Value2
11468
Value
374099
Valued
199276
=NPV(14.9%,170583,11468,
74099,199276)
=
$320,331.18
Step
2:
Calculate
NPV
of
the
project:
$320,331.18
-
$355,970
=
-$35,638.82
Al
together:
=NPV(14.9%,170583,11468,74099,199276)
-
355970
=
-$35,638.82
File
Home
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Data
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AKX
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v
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=NPV/(14.9%,170583,11468,74099,199276)
A
A
B
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[$320331.18
|
2
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($35,638.82)]
2
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Question
3
Green
Landscaping,
Inc.
is
using
net
present
value
(NPV)
when
evaluating
projects.
Green
Landscaping’s
cost
of
capital
is
8.11
percent.
What
is
the
NPV
of
a
project
if
the
initial
costs
are
$1,568,909
and
the
project
life
is
estimated
as
5
years?
The
project
will
produce
the
same
after-tax
cash
inflows
of
$581,897
per
year
at
the
end
of
the
year.
Round
the
answer
to
two
decimal
places.
Your
Answer:
74771674
Answer
W
Hide
Check
my
answer
Step
1:
Calculate
present
value
of
cash
flows
received
in
years
1-5
using
Excel
function
PV.
(Formulas
-
Financial
-
PV)
Enter:
Rate
8.11%
Nper
5
Pmt
581897
FV
0
Type
0
=PV(8.11%,5,581897.0)
=
$2,316,625.74
(the
answer
appears
in
Excel
as
a
negative
number)
Step
2:
Calculate
NPV
of
the
project:
$2,316,625.74
-
$1,568,909
=
$747,716.74
File
Home
Insert
Page
Layout
Formulas
Data
Rer
I3
g
Insert
AutoSum
Recently
Financial
Logical
Text
Date&
Lookup&
Mz
Function
<
Used
v
<
<
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Time~
Reference~
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Function
Library
A1
M
fe
||
=PV(8.11%,5,581897,0,0)
A
A
B
C
D
E
F
1Sz,316,625.74jl
1
2
Question
4
Aproject
has
an
initial
outlay
of
$1,545.
It
has
a
single
payoff
at
the
end
of
year
9
of
$9,356.
What
is
the net
present
value
(NPV)
of
the
project
if
the
company’s
cost
of
capital
is
8.29
percent?
Round
the
answer
to
two
decimal
places.
Your
Answer:
3023.73
Answer
W
Hide
Check
my
answer
Step
1:
Calculate
present
value
of
cash flow
received
at
the
end
of
year
9
using
Excel
function
PV.
(Formulas
-
Financial
-
PV)
Enter:
Rate
8.29%
Nper
9
Pmt
0
FV
9356
Type
0
=PV(8.29%.9.0,9356,0)
=
$4,568.73
(the
answer
appears
in
Excel
as
a
negative
number)
Step
2:
Calculate
NPV
of
the
project:
$4,568.73
-
1,545
=
$3,023.73
File
Home
Insert
Page
Layout
Formulas
Data
2D
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Logical
Text
Date&
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>
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~
>
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Library
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=PV(8.29%,9,0,9356,0)
4
A
B
c
D
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F
1
(54,563.7311
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Related Questions
Find the net present value (NPV) for the following series of future cash flows, assuming the company’s cost of capital is 10.19 percent. The initial outlay is $471,448.
Year 1: 191,637
Year 2: 128,236
Year 3: 161,255
Year 4: 138,369
Year 5: 190,517
Round the answer to two decimal places in percentage form.
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What is the Net Present Value of the following cash flow stream? Year Cash Flow 0 - $1, 145 1 $459 2 $ 383 3
$411 4 $266 Assume an interest rate of 16% round off your answer by two decimal places!!!
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What is the future value at the end of year three of the following set of cash flows at an interest rate of 10% p.a. compounded annually?
End of Year 1 $5,100
End of Year 2 $2,300
End of Year 3 $1,150
Select one:
a.
$8,550
b.
$9,966
c.
$9,851
d.
$9,581
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Pls give me a correct answer
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question 13
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(A_FIG1) In the following cash flows
diagram, Determine the value of Z if the
interest rate i = 8% per year?
A =
$500/year
1
2
3
4
6.
7
8
9
Years
O a. $3,974
b. $7,116
O c. $ 10,401
O d. $5,206
O O
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QUESTION 2
REQUIRED
Use the information given below to calculate the following:
2.1
Payback Period of Project B (answer expressed in years, months and days).
2.2
Accounting Rate of Return (on average investment) of Project B (answer
expressed to two decimal places).
2.3
Net Present Value of Project A (amounts rounded off to the nearest Rand.)
2.4
Internal Rate of Return of Project B, if the net cash flows are R120 000 per
year for five years (answer expressed to two decimal places).
INFORMATION
The following information relates to two capital investment projects:
Project A
Project B
Initial cost
R400 000
R400 000
Expected useful life
5 years
5 years
Scrap/Residual value
R40 000
Depreciation per year
R72 000
R80 000
Expected annual profits:
R
R
End of: Year 1
100 000
45 000
Year 2
60 000
45 000
Year 3
50 000
45 000
Year 4
30 000
45 000
Year 5
20 000
45 000
The company estimates that its cost of capital is 15%.
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Calculate the internal rates of return of the following investment:
Net investment
-$1,000
Year 0
Net cash flows
+6,000
Year 1
-11,000
Year 2
+6,000
Year 3
Round your answers to the nearest whole number and enter them in ascending order.
IRR1: %
IRR2: %
IRR3: %
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17
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Consider the following cash flows:
Year
0123
0
Cash Flow
-$28,700
15,000
13,900
10,300
a. What is the profitability index for the cash flows if the relevant discount rate is 12
percent? (Do not round intermediate calculations and round your answer to 3
decimal places, e.g., 32.161.)
b. What is the profitability index if the discount rate is 17 percent? (Do not round
intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
c. What is the profitability index if the discount rate is 25 percent? (Do not round
intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
a. Profitability index
b. Profitability index
c.
Profitability index
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Question content area top
Part 1
(Present value of complex cash flows) You have an opportunity to make an investment that will pay
$300
at the end of the first year,
$100
at the end of the second year,
$500
at the end of the third year,
$300
at the end of the fourth year, and
$400
at the end of the fifth year.
a. Find the present value if the interest rate is
12
percent. (Hint: You can simply bring each cash flow back to the present and then add them up. Another way to work this problem is to either use the
=NPV
function in Excel or to use your CF key on a financial
calculator—but
you'll want to check your calculator's manual before you use this key. Keep in mind that with the
=NPV
function in Excel, there is no initial outlay. That is, all this function does is bring all the future cash flows back to the present. With a financial calculator, you should keep in mind that
CF0
is the initial outlay or cash flow at time 0, and, because there is no cash flow at time…
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Consider the following cash flows:
Year
Cash Flow
$32,000
14,200
17,500
11,600
1
3
What is the IRR of the cash flows? (Do not round intermediate calculations and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Internal rate of return
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QUESTION 4
For the nonconventional net cash flow series shown, the external rate of return per year using the MIRR method, with an investment rate of 20% per year and a
borrowing rate of 8% per year, is closest to:
Year
2.
-29,000
NCF, S
-40,000
+18,848
+25,000
+57,912
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What is the present worth (P) of all the cash
flows if F=16000, n=6 years, and i= 8% per
year?
Select one:
O a. $16,480.00
b. $103,824.00
O c. $10,082.71
O d. $34,608.00
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Damien offers you a sequence of end-of-year cash flows for an investment as follows:
Year
1
2
3
4
4
What is the value of the cash flows if the opportunity cost is 6 percent? (Round to the nearest dollar). Please click on the
following link to access a blank worksheet Click to open::
O $8.392
$8.598
Cash Flow
$4,000
$3,000
$2,000
$1,000
$8.734
$8.915
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Compute the IRR from the following set of cash flows:
Year
Cash Flow
0
(1000)
1
400
2
400
3
400
4
600
Question 10 options:
15.2
21.9
26.4
33.9
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12
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Related Questions
- Find the net present value (NPV) for the following series of future cash flows, assuming the company’s cost of capital is 10.19 percent. The initial outlay is $471,448. Year 1: 191,637 Year 2: 128,236 Year 3: 161,255 Year 4: 138,369 Year 5: 190,517 Round the answer to two decimal places in percentage form.arrow_forwardWhat is the Net Present Value of the following cash flow stream? Year Cash Flow 0 - $1, 145 1 $459 2 $ 383 3 $411 4 $266 Assume an interest rate of 16% round off your answer by two decimal places!!!arrow_forwardWhat is the future value at the end of year three of the following set of cash flows at an interest rate of 10% p.a. compounded annually? End of Year 1 $5,100 End of Year 2 $2,300 End of Year 3 $1,150 Select one: a. $8,550 b. $9,966 c. $9,851 d. $9,581arrow_forward
- QUESTION 2 REQUIRED Use the information given below to calculate the following: 2.1 Payback Period of Project B (answer expressed in years, months and days). 2.2 Accounting Rate of Return (on average investment) of Project B (answer expressed to two decimal places). 2.3 Net Present Value of Project A (amounts rounded off to the nearest Rand.) 2.4 Internal Rate of Return of Project B, if the net cash flows are R120 000 per year for five years (answer expressed to two decimal places). INFORMATION The following information relates to two capital investment projects: Project A Project B Initial cost R400 000 R400 000 Expected useful life 5 years 5 years Scrap/Residual value R40 000 Depreciation per year R72 000 R80 000 Expected annual profits: R R End of: Year 1 100 000 45 000 Year 2 60 000 45 000 Year 3 50 000 45 000 Year 4 30 000 45 000 Year 5 20 000 45 000 The company estimates that its cost of capital is 15%.arrow_forwardCalculate the internal rates of return of the following investment: Net investment -$1,000 Year 0 Net cash flows +6,000 Year 1 -11,000 Year 2 +6,000 Year 3 Round your answers to the nearest whole number and enter them in ascending order. IRR1: % IRR2: % IRR3: %arrow_forward17arrow_forward
- Consider the following cash flows: Year 0123 0 Cash Flow -$28,700 15,000 13,900 10,300 a. What is the profitability index for the cash flows if the relevant discount rate is 12 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. What is the profitability index if the discount rate is 17 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) c. What is the profitability index if the discount rate is 25 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) a. Profitability index b. Profitability index c. Profitability indexarrow_forwardQuestion content area top Part 1 (Present value of complex cash flows) You have an opportunity to make an investment that will pay $300 at the end of the first year, $100 at the end of the second year, $500 at the end of the third year, $300 at the end of the fourth year, and $400 at the end of the fifth year. a. Find the present value if the interest rate is 12 percent. (Hint: You can simply bring each cash flow back to the present and then add them up. Another way to work this problem is to either use the =NPV function in Excel or to use your CF key on a financial calculator—but you'll want to check your calculator's manual before you use this key. Keep in mind that with the =NPV function in Excel, there is no initial outlay. That is, all this function does is bring all the future cash flows back to the present. With a financial calculator, you should keep in mind that CF0 is the initial outlay or cash flow at time 0, and, because there is no cash flow at time…arrow_forwardConsider the following cash flows: Year Cash Flow $32,000 14,200 17,500 11,600 1 3 What is the IRR of the cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of returnarrow_forward
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