a) Find the relevant cash flows for each of the relevant periods (Time 0 – Time 9). Operating cash flows for Time 1-8 should include: Earnings before taxes Taxes (30%) Net Income Depreciation Free Cash flows b) Calculate the NPV, IRR and Payback Period for the cash flows and indicate whether BGM should pursue the mining project or not.

a) Find the relevant cash flows for each of the relevant periods (Time 0 – Time 9). Operating cash flows for Time 1-8 should include: Earnings before taxes Taxes (30%) Net Income Depreciation Free Cash flows b) Calculate the NPV, IRR and Payback Period for the cash flows and indicate whether BGM should pursue the mining project or not.

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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Suppose your firm is planning to undertake a mining project. After completing the mining activity, it will restore the land. The cash flows are below. What are the IRRs of this investment? Timeline 0 1 2 3 4 5 CF $ (45.00) $ 45.00 $ 46.00 $ (16.00) $ (16.00) $ (16.00)
Select all of the following that managers can use to evaluate capital invesments. (Select all that apply.) High-Low Method Net present value method LIFO Method Internal rate of return method FIFO Method Annual rate of return Cash payback technique Depreciation method
Distinguish between annual income in the presence of depreciation and annual operating cash flow?
Subject: acounting
The cash flows associated with a project can be represented by the following decision tree (conditional probabilities are in parentheses): Year 0 Year 1 5000 O $289.09 O $317.46 O $232.35 $400 (4) O $345.83 O $260.72 $600 (0) Year 2 $300 (5) $600 (5) $400 (5) 5600 (5) Given this data, determine the expected NPV for this project if the appropriate cost of capital is 12.84 percent. Year 3 $200 (5) $400 (5) $400 (5) SEOD (5) $300 (5) $500 (5) $600 (5) $700 (5)
Take me to the text The following table indicates the net cash flows of a capital asset: Year Net Cash Flow 0 $-13,900 1 $5,500 2 $9,600 Do not enter dollar signs or commas in the input boxes. Use the negative sign where appropriate. Round the factor to 4 decimal places and the NPV to the nearest whole number. Assume the required rate of return is 13%. Determine the net present value of this asset. Year Net Cash Flow 0 1 2 Total $-13,900 $5,500 $9,600 Factor Net Present Value SA $ A
Here are cash flows for a project under consideration. C(0)= -$8160, C(1)=6180, and C(2)=20280. What is the IRR of the project?
Which of the following is an appropriate method of computing free cash fl ow to the fi rm? A . Add operating cash fl ows to capital expenditures and deduct after-tax interest payments.
Pls show proper steps correctly with explanation.
To project the appropriate anticipated cash flow for a project, we must put all cash flow knowledge together. This includes of the incremental cash flow. OA) the amount but not the timing B) the timing C) the amount D) both the amount and timing 33
A firm has projected the following financials for a possible project: YEAR Sales Cost of Goods S&A Depreciation Investment in NWC Investment in Gross PPE 0 1,130.00 105,468.00 1 132,716.00 Submit 549.00 2 62,780.00 62,780.00 30,000.00 30,000.00 30,000.00 21,093.60 21,093.60 21,093.60 Answer format: Currency: Round to: 2 decimal places. 3 132,716.00 132,716.00 132,716.00 549.00 What is the NPV of the project? (Hint: Be careful about rounding the WACC here!) 4 62,780,00 62,780.00 62,780.00 30,000.00 549.00 21,093.60 549.00 5 132,716.00 The firm has a capital structure of 37.00% debt and 63.00% equity. The cost of debt is 9.00%, while the cost of equity is estimated at 15.00%. The tax rate facing the firm is 38.00%. (Assume that you can't recover the final NWC position in year 5. i.e. only consider the change in NWC for each year) 30,000.00 21,093.60 549.00

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