2. Central Concrete is evaluating a project that would cost $265,000 today. The project is expected to have the following other cash flows: -$35,000 in 1 year, $182,000 in 2 years, $131,000 in 3 years, and $83,000 in 4 years. The cost of capital of the project is 7.93 percent. What is the net present value of the project?

2. Central Concrete is evaluating a project that would cost $265,000 today. The project is expected to have the following other cash flows: -$35,000 in 1 year, $182,000 in 2 years, $131,000 in 3 years, and $83,000 in 4 years. The cost of capital of the project is 7.93 percent. What is the net present value of the project?

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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Shannon Industries is considering a project which has the following cash flows: Year Cash Flow 0 ? 1 $2,000 2 3,000 3 3,000 4 1,500 The project has a payback of 2.5 years. The firm's cost of capital is 12 percent. What is the project's net present value NPV? Round it to a whole dollar, e.g., 1234.
Pharoah Inc. is contemplating a capital project with a cost of $149000. The project will generate net cash flows of $44000 for year 1, $60000 for year 2 and $59000 for year 3. The asset has a salvage value of $10000 and straight-line depreciation will be used. The company's required rate of return is 10%. Year 1 2 3 0 0 0 0 Present Value of 1 at 10% 0.909 0.826 0.751 PV of an Annuity of 1 at 10% 0.909 1.736 2.487 acceptable because it has a positive NPV. unacceptable because it has a zero NPV. unacceptable because it earns a rate less than 10%. acceptable because it has a return of greater than 10%. SUPPO
A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years, and a cost of capital of 8%. What is the project's IRR? Round your answer to two decimal places.
XYZ is evaluating a project that would last for 3 years. The project's cost of capital is 15.60 percent, its NPV is $43,200.00 and the expected cash flows are presented in the table. What is X? Years from today 0 1 2 3 Expected Cash Flow (in $) -55,800 71,000 -15,900 X O An amount less than $43,200.00 or an amount greater than $82,666.00 O An amount equal to or greater than $70,205.00 but less than $82,666.00 O An amount equal to or greater than $60,505.00 but less than $70,205.00 O An amount equal to or greater than $53,257.00 but less than $60,505.00 O An amount equal to or greater than $43,200,00 but less than $53,257.00 M
What is the NPV of a project that costs $38,000 today and is expected to generate annual cash inflows of $9,000 for the next 7 years, followed by a final inflow of $15,000 in year 8. Cost of capital is 7.4%. Round to the nearest cent.
) A company requires an initial investment of $75,000 with a residual value of $12,500 after five years. The estimated annual returns over the five years are $20,000 at 12% compounded annually. What is the net present value of this project? ____________ b. What is the project’s internal rate of return (IRR)? __________
A project has an initial cost of $45,000, expected net cash inflows of $9,000 per year for 10 years, and a cost of capital of 10%. What is the project's MIRR?
Bha
Strange Manufacturing Co. is purchasing a production facility at a cost of $21 million. The firm expects the project to generate annual cash flows of $7 million annually over the next five years. Its cost of capital is 10%. What is the net present value of this project? O $5,535,507 O $6,535,507 O $6,213,909 O $890,197
Kelli is considering a project that would last for 3 years and have a cost of capital of 10.98 percent. The relevant level of net working capital for the project is expected to be $9,620.00 immediately (at year 0); $30,700.00 in 1 year; $27,500.00 in 2 years; and $8,520.00 in 3 years. Relevant expected operating cash flows and cash flows from capital spending in years 0, 1, 2, and 3 are presented in the following table. What is the net present value of this project? Operating cash flows Year 0 $0.00 Year 1 Year 2 Year 3 $52,500.00 $52,500.00 $52,500.00 Cash flows from capital spending -$97,700.00 $0.00 $0.00 $7,800.00 O $99,678.69 (plus or minus $10) $84,352.32 (plus or minus $10) O $114,320.23 (plus or minus $10) $24,215.27 (plus or minus $10) None of the above is within $10 of the correct answer
Cash flows from a new project are expected to be $10,000, $40,000, $30,000, $30,000 and $40,000 over the next 5 years, respectively. Assuming an initial cost of $100,000 and a required return of 8%, what is the project's PI?
Blink of an Eye Company is evaluating a 5-year project that will provide cash flows of $35,700, $62,070, $62,450, $60,260, and $43,300, respectively. The project has an initial cost of $158,080 and the required return is 8.3 percent. What is the project's NPV?

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