5.3 Environmental recovery company RexChem Part- ners plans to finance a site reclamation project that will require a 4-year cleanup period. The company will borrow $3.8 million now to finance the proj- ect. How much will the company have to receive in annual payments for 4 years, provided it will also receive a final lump sum payment after 4 years in the amount of $500,000? The MARR is 20% per year on this investment.

5.3 Environmental recovery company RexChem Part- ners plans to finance a site reclamation project that will require a 4-year cleanup period. The company will borrow $3.8 million now to finance the proj- ect. How much will the company have to receive in annual payments for 4 years, provided it will also receive a final lump sum payment after 4 years in the amount of $500,000? The MARR is 20% per year on this investment.

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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The ABC Resort is redoing its golf course at a cost of $843,000. It expects to generate cash flows of $593,000, $743,000 and $129,000 over the next three years. If the appropriate discount rate for the company is 17.5 percent, what is the NPV of this project (to the nearest dollar)? O a. $279363 O b. $373541 O c. $1965363 O d. $112202
9. Problem 11.02 (IRR) dofice eBook Project L costs $54,779.63, its expected cash inflows are $13,000 per year for 8 years, and its WACC is 11%. What is the project's IRR? Round your answer to two decimal places. %
5
7. A company is considering purchasing equipment for a new product line. The initial investment is R1,500,000. The equipment needs an upgrade after 5 years, this will cost another R750,000. The incremental cashflows for the next 10 years will be R500,000 per year, starting from the end of the first year. The investment period is 10 years. The company's WACC is 12%. Calculate the NPV and the MIRR for the project. Should the company invest in the equipment?
n * A manufacturer of video games develops a new game over two years. This costs $840,000 per year with one payment made immediately and the other at the end of two years. When the game is released, it is expected to make $1.50 million per year for three years after that. What is the net present value (NPV) of this decision if the cost of capital is 8%? OA $2,806,405 OB. $3,332.606 OC. $1,929,404 OD. $1,754,003
11. I need help with finance home work question A company is considering a 7-year project. At the beginning of the project, a cash outflow in the amount of $340,000 would be required. The company expects the project would generate cash inflows in the amount of $70,000 at the end of each of the project's 7 years. Assume the company requires a return of 8%. What NPV does the company expect for this project?
Net Present Value Method—Annuity Briggs Excavation Company is planning an investment of $170,200 for a bulldozer. The bulldozer is expected to operate for 1,000 hours per year for five years. Customers will be charged $120 per hour for bulldozer work. The bulldozer operator costs $29 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $10,000. The bulldozer uses fuel that is expected to cost $38 per hour of bulldozer operation. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 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 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 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 a. Determine the equal annual net cash flows from operating the bulldozer. Use a minus…
JS er st un gs Sunland, Inc. management is considering purchasing a new machine at a cost of $4,370,000. They expect this equipment to produce cash flows of $791,390, $796,950, $866,730, $1,116,300, $1,212,360, and $1,300,900 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.) The NPV is tA $
27² Riai Airlines is considering two alternative Planes. Plane A has an expected life of Sures Years, has an after-tax cost of $80 millian, and will produce after-tax cash flows ofst 21 $40 million per year. Plane B has a life of 10 years, has an after-tax cast of $119 million, and will produce after-tax cash flows of 121 $35 million per year. Rim plans to serve the uni route for 10 years. The company's WACC is 8%. If Rini needs to purchase a new Plane A, the after-tux cost will be $90 million, but cash inflows will remain the Should Rini all acquire Plan A or Plane B? Explain your answer, Enter your answers in millions. For example, same. on answer $10, 550,000 should be entered as lo.ss. Do not round intermediate calculations. Round your criswer to two decimal places. 2004200 Plane is the better project and will increase $ - $ the company's value by 5 millions. millions f ex boll 19 E TOUS
q4- Project A requires an initial outlay of $10000 and will last for 5 years. The investment will be depreciated using straight‐line depreciation to a book value of 0 over the life of the project. The corporate tax rate is 30% and the required rate of return is 8%. What is the annual depreciation amount for Project A?

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