Capital Recovery Ch 5 HW-F23 (1)

LG 6 P5-60 Number of years to provide a given return In each of the following cases, determine the number of years that the given annual end-of-year cash flow must continue to provide the given rate of return on the given initial amount. TTT Case Initial amount Annual cash flow Rate of return A $1,000 $ 250 11% 150,000 30,000 15 80,000 10,000 10 600 275 E 17,000 3,500

Question 10 The present value of an investmnet with three year-end cash flows of $100,000, $150,000, $200,000 and a discount rate of 10% is closest to: 227,573 365,138 O 380,165

Discount Rate 12%         Investment Project Cash Flow Total Net Cash Flow Initial Investment  $           (8,000)  ?  Year 1  $                800 ? Year 2  $                900 ? Year 3  $            1,500 ? Year 4  $            1,800 ? Year 5  $            3,200         NPV of investment $ ? Estimated Payback Period ?       Estimate the total net cash flows, NPV of Investment and Estimated Payback Period using the excel's formula.

Homework, Chapter 26 Internal Rate of Return A project is estimated to cost $352,755 and provide annual net cash flows of $81,000 for six years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine the internal rate of return for this project, using the Present Value of an Annuity of $1 at Compound Interest table shown above. %

Single cash flow End of period (years) Case Discount rate $ 7,000 28,000 10,000 150,000 12% 4 8 20 14 12 11 6 45,000 20 8. P4-12 Present value concept Answer each of the following questions. a. What single investment made today, earning 12% annual interest, will be worth $6,000 at the end of 6 years? b. What is the present value of $6,000 to be received at the end of 6 years i the discount rate is 12%? ABCAE

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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

Exercise A3-17Present Values Use Present Value Tables or your calculator to complete the requirements below. Required: a.  Determine the present value of a single $14,000 cash flow in 7 years if the interest (discount) rate is 8% per year. Round your answer to the nearest cent.$fill in the blank 1 b.  Determine the number of periods for which $5,820 must be invested at an annual interest (discount) rate of 7% to produce an investment balance of $10,000. Round your answer to the nearest whole number of periods.fill in the blank 2 periods c.  Determine the size of the annual cash flow for a 25-year annuity with a present value of $49,113 and an annual interest rate of 9%. One payment is made at the end of each year. Round your answer to the nearest cent.$fill in the blank 3 d.  Determine the annual interest rate at which an investment of $2,542 will provide for a single $4,000 cash flow in 4 years. Round your answer to the nearest whole percentage rate (for example, 10.6% rounds to…

Year Cash Inflow1 14,0002 19,0003 31,0004 05 06 07 130,000 what is the future value of this cash flow at 3%​, 11%​, and 18​% interest rates at the end of year​ 7

7A- What is the rate of return associated with this project? 9 Year Cash Flow 0 -$225,000 1 85,000 2 65,000 3 59,000 4 -35,000 56 -10,000 6 38,000 7 50,000

Investment End of Year A   B   C   1 ​$ 13,000     ​$ 18,000 2    13,000         3    13,000         4    13,000         5    13,000 ​$ 13,000      6        13,000   54,000 7       13,000     8       13,000     9       13,000     10       13,000   18,000 ​   Assuming an annual discount rate of 23 ​percent, find the present value of each investment. a.  What is the present value of investment A at an annual discount rate of 23 ​percent? b.  What is the present value of investment B at an annual discount rate of 23 ​percent? c.  What is the present value of investment C at an annual discount rate of 23 ​percent?

Discount rate: 6% End of year: 1 2 4 Cash flows: (20,000) $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 What is the Net Present Value of the cash flows? At what discount rate is the Net Present Value "0"? Initial outlay: 5,000 Life of investment in years: 10 Amount to be received at end: 10,000 8 Rate of return: Amount of loan: 2$ 50,000 Annual payment: 2$ 10,000 Interest rate: 8% 9. How many years will it take to pay off the loan? 3. %24 %24 %24 %24

Cash Flow -$50,000 $ 7,000 $ 4,000 $9,000 $61,000 Year 1 2 3 4 What is the internal rate of return (IRR) for this investment? 17. Using the information above, wha investment using a 10% discount rate? the NPV of this

Present Value of an Annuity of 1 Periods 8% 9% 10% 1 .926 .917 .909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 A company has a minimum required rate of return of 9%. It is considering investing in a project that costs $210,000 and is expected to generate cash inflows of $84,000 at the end of each year for three years. The net present value of this project is Group of answer choices $21,261. $42,000. $212,604. $2,604.

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