finance final test (3)

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School

Algonquin College *

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Course

2305

Subject

Finance

Date

Jan 9, 2024

Type

docx

Pages

3

Uploaded by CoachEagle2088

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Fijisawa Inc. is considering a major expansion of its product line and has estimated the following free cash flows associated with such an expansion. The initial outlay would be $ 1,950,000 , and the project would generate incremental free cash flows of $ 450,000 per year for 6 years. The appropriate required rate of return is 9 percent. a. Calculate the NPV . b. Calculate the PI . c. Calculate the IRR . d. Should this project be accepted? Yes. The project should be accepted because the project's NPV is positive, PI is greater than one, and IRR is greater than the required rate of return
You are considering a project with an initial cash outlay of $ 80,000 and expected free cash flows of $ 20,000 at the end of each year for 6 years. The required rate of return for this project is 10 percent. a. What is the project's payback period? b. What is the project's NPV ? c. What is the project's PI ? d. What is the project's IRR ? 80,000/20,000 = 4 Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $ 5,000,000 and would generate annual free cash inflows of $ 1,000,000 per year for 8 years. Calculate the project's NPV given: a. A required rate of return of 9 percent. b. A required rate of return of 11 percent. c. A required rate of return of 13 percent. d. A required rate of return of 15 percent. repeated
You are considering two independent projects, project A and project B. The initial cash outlay associated with project A is $ 50,000 , and the initial cash outlay associated with project B is $ 70,000 . The required rate of return on both projects is 12 percent. The expected annual free cash inflows from each project are in the popup window: Calculate the NPV , PI , and IRR for each project and indicate if the project should be accepted . b. npv + 50,000 / 50,000
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