12 13 Coyne Corporation is evaluating a capital investment opportunity. This project would require an initial investment of $31,000 to purchase equipment. The equipment will have a residual value at the end of its life of $1.000 The useful life of the equipment is 4 years. The new project is expected to generate additional net cash inflows of $22.000 per year for each of the four years. Coyne's required rate of return is 12% The net present value of this project is closest to (Cack the icon to view the present value of $1 table) 131 (Cick the icon to view the present value of annuity of $1 table) OA. $18,656 OB. $35.814 OC. $36,450 OD. 547,734 Data table Present Value of $1 Periods 3 4 5 6 Data table 10% 0.751 0.683 3 4 5 6 0.621 0.564 Present Value of Annuity of $1 Periods 10% 2.487 E [0 3.170 3.791 4.355 12% 0712 0.636 0.567 0.507 Print Print 12% 2.402 3.037 3.605 4.111 Done Done 14% 0.675 0.592 0.519 0.456 14% 2.322 2.914 3.433 3.889 16% 0.641 0.552 0.476 0.410 16% 2.246 2.798 3.274 3.685 <- X ent is s requ requi

12 13 Coyne Corporation is evaluating a capital investment opportunity. This project would require an initial investment of $31,000 to purchase equipment. The equipment will have a residual value at the end of its life of $1.000 The useful life of the equipment is 4 years. The new project is expected to generate additional net cash inflows of $22.000 per year for each of the four years. Coyne's required rate of return is 12% The net present value of this project is closest to (Cack the icon to view the present value of $1 table) 131 (Cick the icon to view the present value of annuity of $1 table) OA. $18,656 OB. $35.814 OC. $36,450 OD. 547,734 Data table Present Value of $1 Periods 3 4 5 6 Data table 10% 0.751 0.683 3 4 5 6 0.621 0.564 Present Value of Annuity of $1 Periods 10% 2.487 E [0 3.170 3.791 4.355 12% 0712 0.636 0.567 0.507 Print Print 12% 2.402 3.037 3.605 4.111 Done Done 14% 0.675 0.592 0.519 0.456 14% 2.322 2.914 3.433 3.889 16% 0.641 0.552 0.476 0.410 16% 2.246 2.798 3.274 3.685 <- X ent is s requ requi

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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#11 NPV A proposed nuclear power plant will cost 2.2 to build and then will produce cash flow of 3 million per year for 15 years. After that period (in 15 years) it must be decommissioned at a cost of 900 million. What is the project NPV if the discount rate is 5%? What is the discount rate at 18%?
20- Project Beta is a 4-year project which requires an initial outlay of $6,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $6000 per year and incremental costs (excluding depreciation) of $1400. The tax rate is 35%. What is the project's annual incremental EBIT? a. $3100 b. $4600 c. $1600 d. $6100 Clear my choice
#12
22 The Market Place is considering a new four-year expansion project that requires an initial fixed asset investment of $1.67 million. The fixed asset will be depreciated straight-line to zero over its four-year tax life, after which time it will have a market value of $435,000. No bonus depreciation will be taken. The project requires an initial investment in net working capital of $198,000, all of which will be recovered at the end of the project. The project is estimated to generate $1,850,000 in annual sales, with costs of $1,038,000. The tax rate is 21 percent and the required return for the project is 16.4 percent. What is the net present value? 8 03:27:09 Multiple Choice O $358,576.22 $451,180.73 $241,334.55 $302,208.15 $254,595.45
3
17. Problem 11.20 (NPV) eBook A project has annual cash flows of $6,000 for the next 10 years and then $10,500 each year for the following 10 years. The IRR of this 20-year project is 11.42%. If the firm's WACC is 8%, what is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent. $
13
NPV (net present value) Craig is considering several capital investments for the upcoming year. Use the NPV (net present value) method to determine whether the company should investment in the following independent projects: Project 1 costs $28,000 and offers 8 annual cash flows of $8,600. Craig feels this type of investment should require an annual return of 16% on projects like this. Project 2 costs $35,000 and offers 6 annual cash flows of $12,000. Craig feels this type of investment should require an annual return of 12% on projects like this. Requirements 1. Calculate the NPV of both of these projects 2. What is the maximum acceptable price Craig should pay for each of these projects?
Question 23 Charles Henri is considering investing $60,000 in a project this is expected to provide him with cash inflows of $15,000 in each of the first three years and $20,000 for the following year. At a discount rate of 7 percent this investment has a net present value of ____, but at the relevant discount rate of 3 percent the project’s net present value is ____. Group of answer choices $5,000; $198.91 $5,000; $289.19 $5,000; $378.27 $10,000; $289.19 $10,000; $423.15
V11
10 1 points Fun With Finance is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.484 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $193,200. The project requires an initial investment in net working capital of $276,000. The project is estimated to generate $2,208,000 in annual sales, with costs of $883,200. The tax rate is 33 percent and the required return on the project is 11 percent. Required: (a)What is the project's year 0 net cash flow? -2,760,000 V (b)What is the project's year 1 net cash flow? 1,044,770 (c) What is the project's year 2 net cash flow? 1,276,942 (d)What is the project's year 3 net cash flow? 1,566,300 (e)What is the NPV? 1,100,871 View previc
Q7: Oil wells in the United States can operate and produce for an average of 20-40 years. Investing in an oil well requires foreseeing risks, opportunities, and costs associated with the project investment. Suppose you are an investor and considering investing in a project that will produce for 20 years. The expected annual production capacity is 25,000 barrels. The fixed cost of purchasing equipment, leasing land, drilling the well, and setting up production equipment is $15 million. The marginal cost of producing is $20 / barrel, and you expect the price of oil to be $80 / barrel for the entire lifespan of this rig. The annual interest rate is 10%. Should you invest? If yes, in which year will it start to be profitable? If no, why not?

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