A company, Skyline Industries, is considering investing in new equipment that will cost $4,600 at time = 0. The after-tax cash flows are expected to be $700 per year for 5 years. What is the payback period? (Round your answer to two decimal points.)
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- Jasmine Manufacturing is considering a project that will require an initial investment of $52,000 and is expected to generate future cash flows of $10,000 for years 1 through 3, $8,000 for years 4 and 5, and $2,000 for years 6 through 10. What is the payback period for this project?Consider a project in which you have to invest $15,000 today and you will receive $24847 in one year. What is the internal rate of return (IRR) of this project? The IRR is % (Keep 2 decimal places). Answer:Your firm has a potential project that will cost $5,000 now to begin. The project will then generate after-tax cash flows of • $402 at the end of the next three years and then $1,867 per year for the three years after that. If the discount rate is 8.55% then what is the NPV?
- You are trying to value the following project for your company. You know that the project will generate free cash flows in perpetuity that will grow at a constant annual rate of 1.5% after year 3. The applicable interest rate for this project is 7.5%. What is the NPV of this project? Express your result in $-millions and round to two decimals (do not include the $-symbol in your answer). If you calculate a negative NPV enter a negative number. Year Free Cash Flows Free Cash Flow Forecasts (in $-millions) 0 -130 Year 1 -1 2 3 24 37Suppose you invest $2,000 today and receive $11,000 in five years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $2,000 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the amount you will receive each year?You are considering opening a new plant. The plant will cost $100.0 million upfront. After that, it is expected to produce profits of $30.0 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8.0%. Should you make the investment? Calculate the IRR. Use the IRR to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.
- Let's say you have a project which will cost $25mm to build or buy. It will produce after-tax cash flows of $4mm for 9 years with each cash flow occurring at the end of the year. At the end of the 9 years, you will also receive a residual value payment of $3mm. What is the IRR of the project? Round to the nearest one decimal place and use the % symbol. 6.3% would be the form of a correct answer.What is the payback period of this financial accounting question?Your firm has identified three potential investment projects. The projects and their cash flows are shown here: Project Cash Flow Today (millions) Cash Flow in One Year (millions) A −$13 $23 B $7 $3 C $25 -$15 Suppose all cash flows are certain and the risk-free interest rate is 6%. What is the NPV of each project? (Round to two decimal places.) If the firm can choose only one of these projects, which should it choose based on the NPV decision rule? (Round to two decimal places.) If the firm can choose any two of these projects, which should it choose based on the NPV decision rule? (Round to two decimal places.)
- You have an investment opportunity that requires an initial investment of $5,000 today and will pay $6,000 in one year. What is the rate of return of this opportunity? The rate of return for this opportunity is ____%.You invest in a project that is expected to generate fixed annual cashflows for 4 years beginning in 7 years from today. If the discount rate is 6.4% and the project has a price of $5k today, then what are the fixed annual cashflows? (Round to the nearest cent).You are considering opening a new plant. The plant will cost $98.2 million upfront. After that, it is expected to produce profits of $30.2 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 6.6%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. Calculate the NPV of this investment opportunity if your cost of capital is 6.6%. The NPV of this investment opportunity is $ million. (Round to one decimal place.)