Case 20

6. Wainright Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 720 2 930 3 1,190 4 1,275 If the discount rate is 10 percent, what is the present value of these cash flows? Present value $ What is the present value at 18 percent? Present value $ What is the present value at 24 percent? Present value $

Fuente, Incorporated, has identified an investment project with the following cash flows. Cash Flow $700 925 1,125 1,250 Year 1 2 3 4 a.lf the discount rate is 11 percent, what is the future value of these cash flows in year 4? Future value at 11% b.What is the future value at a discount rate of 18 percent? Future value at 18%

McCann Co. has identified an investment project with the following cash flows.   Year Cash Flow  1 $800             2 1,030             3 1,340             4 1,110                  a If the discount rate is 10 percent, what is the present value of these cash flows? b What is the present value at 18 and 28 percent?

The following information regarding an investment project is available.   Discount rate 7% Year Cash Flow 0 (£125,000) 1 £60,000 2 £50,000 3 £10,000 4 £10,000 5 £50,000   A). What is the Net Present Value of the Project? Choose one from the following:   A. £56,076   B. £43,670   C. £125,000   D. £26,188

Q:57)

Wells Inc., has identified an investment project with the following cash flows. Year            Cash flow  1                       $970 2                       $1200 3                       $1420 4                       $2160 a.) If the discount rate is 7 percent, what is the future value of these cash flows in year 4? a.) Future value at 7 percent_____ b.) What is the future value at an interest rate of 13 percent? b.) Future value at 13 percent_____ c.) What is the future value at an interst rate of 22 percent? c.) Future value at 22 percent_____

56 Fuente, Incorporated, has identified an Investment project with the following cash flows. Year Cash Flow 1 2 3 4 $625 950 1.125 1,400 a.If the discount rate is 9 percent, what is the future value of these cash flows in year 4? Future value at 9% b.What is the future value at a discount rate of 18 percent? Future value at 18% c.What is the future value at discount rate of 27 percent? Future value at 27%

K (Present value of annuities and complex cash flows) You are given three investment alternatives to analy End of Year 1 5678AWN2 3 A $15,000 15,000 15,000 15,000 15,000 Investment B $15,000 15,000 15,000 15,000 C $20,000 60,000 a. What is the present value of investment A at an annual discount rate of 19 percent? (Round to the nearest cent.) BELEID

What is the net present value of a project with the following cash flows if the discount rate is 10 percent? $1,085.25 c. $3,498.28 $1,193.77 d. $4,102.86

A Kshs.2.2 million investment will result in the following year end- cash flows : Year Cash flow 1 Kshs 1.6 million Kshs 800,000 3 Kshs.1.3 million 4 Kshs.1.9 million Using an 8% cost of capital, the project's net present value (NPV) is closest to: 2.

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 - $ 215,000 -$ 57,000 34,000 32,900 L234 1 4 45,000 51,000 270,000 24,300 18,300 17,800 The required return on these investments is 13 percent. a. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. What is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. c. What is the IRR for each project? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. d. What is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. e. Based on your answers in (a) through (d), which project will you finally choose? a. Project A Project B b. Project A Project B c. Project A Project B d.…

An investment will provide the following future cash flows. Year 1 6,768 Year 2 = 3,989 Year 3 and 4 = 6,869 Year 5 = 1,797 Using a 9.96% discount rate, what is the present value of this investment?

Baghiben

Vijay

Compute the payback perlod for an Investment with the following net cash flows. (Round your answer to one decimal place.) Net Cash Flows per Year Cumulative Net Cash Flows $ (101,000) $ (101,000) (90,900) (70,800) Year Initial investment 1. 2. 3. 5. 6. Payback period 10,100 20,100 20,100 26,640 40,100 40,100 years (50,700) (24,060) 16,040 56,140

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$ 243,567 -$ 15,530 1 27,200 55,000 60,000 413,000 234 5,173 8,261 13,237 8,729 Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A? Payback period

3) Consider the following two projects:   Net Cash Flow Each Period Initial Outlay 1 2 3 4 Project A  $4,000,000 $2,003,000 $2,003,000 $2,003,000 $2,003,000 Project B   $4,000,000 0 0 0 $11,000,000   Calculate the net present value of each of the above projects, assuming a 14 percent discount rate. What is the internal rate of return for each of the above projects? Compare and explain the conflicting rankings of the NPVs and IRRs obtained in parts a and b above. If 14 percent is the required rate of return, and these projects are independent, what decision should be made? If 14 percent is the required rate of return, and the projects are mutually exclusive, what decision should be made?

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