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Assume all cash flows occur at the end of each period. a. What are the yearly cash flows and their present value (discounted at 10 percent) of this project? What is the net present value? Note: Enter your answer in thousands of dollars. Perform all calculations using Excel. Do not round any intermediate calculations. Negative value should be indicated by a minus sign. Et present value . ] b. Perot’s engineers have determined that spending $10 million more on development will allow them to add even more advanced features. Having a more advanced chip will allow them to price the chip $50 higher in both years ($870 for year 1and $700 for year 2). What is the NPV of the project if this option is implemented? Note: Enter your answer in thousands of dollars. Perform all calculations using Excel. Do not round any intermediate calculations. Negative value should be indicated by a minus sign. Et present value ] | c. If sales are only 260,000 the first year and 130,000 the second year, what would the NPV of the project be? Assume the development costs and sales price are as originally estimated. Note: Enter your answer in thousands of dollars. Perform all calculations using Excel. Do not round any intermediate calculations. Negative value should be indicated by a minus sign. Et present value ] |
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Related Questions
A project that will provde annual cash flows of $3,000 for nine years costs $10,000 today.
a. At a required return of 10 percent, what is the NPV of the project?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
b. At a required return of 28 percent, what is the NPV of the project?
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer
to 2 decimal places, e.g., 32.16.
c. At what discount rate would you be indifferent between accepting the project and rejecting it?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
a. NPV
b. NPV
c. Discount rate
%
arrow_forward
Consider two investment projects, which both require an upfront investment of $9 million, and both of which pay a constant positive amount each year for the next 9
years. Under what conditions can you rank these projects by comparing their IRRS?
(Select the best choice below.)
O A. There are no conditions under which you can use the IRR to rank projects.
O B. Ranking by IRR will work in this case so long as the projects' cash flows do not decrease from year to year.
O C. Ranking by IRR will work in this case so long as the projects' cash flows do not increase from year to year.
O D. Ranking by IRR will work in this case so long as the projects have the same risk.
arrow_forward
A project that provides annual cash flows of $2,620 for eight years costs $9,430 today. a.At a required return of 8 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)b.At a required return of 24 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)c.At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
arrow_forward
A project that will provde annual cash flows of $2,550 for nine years costs $10,500
today.
a. At a required return of 11 percent, what is the NPV of the project? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. At a required return of 27 percent, what is the NPV of the project? (A negative answer
should be indicated by a minus sign. Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
c. At what discount rate would you be indifferent between accepting the project and
rejecting it? (Do not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
a. NPV
b. NPV
c. Discount rate
arrow_forward
A project has expected cash inflows of $2,200 in year 1, $2,900 in year 2, $3,500 in year 3, and $4,000 in year 4. After year 4, there will be no further cash flows. If the profitability index is 1.14 and the discount rate is 12%, what is the initial cost of the project?
a) $7,899.16
b) $8,098.24
c) $8,166.19
d) $9,211.06
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Please solve. General Accounting question
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A project that provides annual cash flows of $12,600 for 12 years costs $65,000 today. At what rate would you be indifferent between accepting the project and rejecting it?
Answer with Excel functions
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You are considering a project with an initial cost of $7,500. What is the payback period for this project if the cash inflows are $1,100, $1,640, $3,800, and $4,500 a year over the next four years, respectively?
Don't use Excel.
arrow_forward
A firm evaluates all of its projects by applying the NPV decision rule. A project under
consideration has the following cash flows:
Year
0
1
2
3
NPV
Cash Flow
What is the NPV for the project if the required return is 10 percent? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
-$ 27,600
11,600
14,600
10,600
At a required return of 10 percent, should the firm accept this project?
NPV
O No
Yes
What is the NPV for the project if the required return is 26 percent? (A negative
answer should be indicated by a minus sign. Do not round intermediate calculations
and round your answer to 2 decimal places, e.g., 32.16.)
arrow_forward
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows:
Year
Cash Flow
0
–$
27,300
1
11,300
2
14,300
3
10,300
What is the NPV for the project if the required return is 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
At a required return of 10 percent, should the firm accept this project?
multiple choice 1
Yes
No
What is the NPV for the project if the required return is 26 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
At a required return of 26 percent, should the firm accept this project?
multiple choice 2
Yes
No
arrow_forward
Please answer the following questions using the information below:
NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected?
PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?
Consider the following cash flows:
Year 0 1 2 3 4 5 6
Cash Flow -$8,000 $3,000 $3,600 $2,700 $2,500 $2,100 $1,600
Payback. The company requires all projects to payback within 3 years. Calculate the payback period. Should it be accepted or rejected?
Discounted Payback. Calculate the discounted payback using a discount rate of 10%. Should it be accepted or rejected?
IRR. Calculate the IRR for this project. The company’s required rate of return is 10%. Should it be accepted or rejected?
NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected?
PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?…
arrow_forward
Given the correct
arrow_forward
A project that provides annual cash flows of $16,800 for nine years costs $74,000 today.
What is the NPV for the project if the required return is 8 percent? (Do not round
intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
NPV
At a required return of 8 percent, should the firm accept this project?
Аcсept
Reject
What is the NPv for the project if the required return is 20 percent? (A negative
answer should be indicated by a minus sign. Do not round intermediate calculations
and round your answer to 2 decimal places, e.g., 32.16.)
NPV
arrow_forward
A project that costs $2,300 to install will provide annual cash flows of $730 for each of
the next 5 years.
a. Calculate the NPV if the opportunity cost of capital is 12%? (Do not round
intermediate calculations. Round your answer to 2 decimal places.)
NPV
b. Is this project worth pursuing?
Yes
O No
c. What is the project's internal rate of return IRR? (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
%24
arrow_forward
5) A project has an initial cost of $50,000, expected net cash inflows of $9,000 per year for 10 years, and a cost of capital of 10%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent.
______$
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Explain all point of question with proper explanation.
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Suppose you are evaluating a project with the cash inflows shown in the following table. Your boss has asked you to calculate the project's net present
value (NPV). You don't know the project's initial cost, but you do know the project's regular, or conventional, payback period is 2.5 years.
The project's annual cash flows are:
Year
Year 1
Year 2
Year 3
Year 4
Cash Flow
$375,000
400,000
300,000
350,000
If the project's desired rate of return is 7.00%, the project's NPV is
(Hint: Round your calculations to the nearest dollar.)
arrow_forward
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows:
Year
Cash Flow
0
–$
28,600
1
12,600
2
15,600
3
11,600
If the required return is 14 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Should the firm accept the project?
Yes
No
arrow_forward
Give me answer
arrow_forward
Consider two investment projects, both of which require an upfront investment of $10 million and pay a
constant positive amount each year for the next 12 years. Under what conditions can you rank these
projects by comparing their IRRS?
(Select the best choice below.)
A. Ranking by IRR will work in this case so long as the projects' cash flows do not decrease from
year to year.
B. Ranking by IRR will work in this case so long as the projects' cash flows do not increase from
year to year.
C. Ranking by IRR will work in this case so long as the projects have the same risk.
D. There are no conditions under which you can use the IRR to rank projects.
arrow_forward
please answer the question (12-13-14-15)
arrow_forward
Joru
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7) A project has an initial cost of $40,000, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 10%. What is the project's MIRR? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.
_____%
arrow_forward
The Michner Corporation is trying to choose between the following two mutually exclusive design projects:
Year Cash Flow (I)
0
-$ 82,000
1
37,600
2
37,600
37,600
Cash Flow (II)
-$ 21,700
11, 200
11,200
11, 200
a-1. If the required return is 10 percent, 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.
a-2. If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm
accept?
b-1. If the required return is 10 percent, 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.
b-2. If the company applies the NPV decision rule, which project should it take?
a-1. Project I
Project II
a-2. Project acceptance
b-1. Project I
Project II
b-2. Project acceptance
arrow_forward
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Related Questions
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