A firm is considering a six-year project with a payback period of 3.5 years. It has cash flows the first three years of $2,000 per year, and cash flows of $1,000 during its last three years. What is the NPV of this project in a 10% "world?" [using a 10% distount rate!] O $2,500 O $881 O$1,097 O $342 O $687

A firm is considering a six-year project with a payback period of 3.5 years. It has cash flows the first three years of $2,000 per year, and cash flows of $1,000 during its last three years. What is the NPV of this project in a 10% "world?" [using a 10% distount rate!] O $2,500 O $881 O$1,097 O $342 O $687

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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Your firm is considering an investment that will cost $750,000 today. The investment will produce cash flows of $250,000 in year 1, $300,000 in years 2 through 4, and $100,000 in year 5. What is the investment's discounted payback period if the required rate of return is 10%? Answer 3.33 years 3.16 years 2.67 years 2.33 years
K You have been offered a unique investment opportunity. If you invest $11,300 today, you will receive $565 one year from now, $1,695 two years from now, and $11,300 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.7% per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.7% per year? Should you take it now? a. What is the NPV of the opportunity if the cost of capital is 5,7% per year? If the cost of capital is 5.7% per year, the NPV is $. (Round to the nearest cent.)
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If a project requires an initial current investment of £200 and promises to raise £133.1 after three years, what is this project's Net Present Value (NPV) if your discount rate is 10% per year? a) - £66.9 b) - £100 c) Zero d) £66.9
Big Steve's, a maker of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $130,000 and will generate cash inflows of $37,000 per year for 7 years. If the discount rate is 17%, what is the project's IRR? (Round to two decimal places.) O A.17.00% OB. 20.94% O C. 32.52% OD. 37.33% MacBook Air
raghubhai
The cash flow of an energy management opportunity is estimated as follows: Initial cost:$12,000 Energy saving:$2,700/year for 12 years Maintenance cost:$1,200/year for 12 years Salvage value:$2,500@the end of 12 years If the interest rate is 10%, 1) What is the simple payback period (SPP) (in years)? (a)5.2 (b)4.2 (c)4.6 (d)8.02) With an annual discount rate is 10%, what is the discounted payback period (in years)? (a)9.5 b) 15.1 (c)8.1 (d) 16.9 (e) 6.53)With an annual discount rate is 10%, what is the benefit-cost ratio (BCR)? (Hint: Benefit = Annual saving-Maintenance; Cost= Initial investment - Salvage)(a) 1.04(b) 0.80(c) 1.25(d) 1.12(e) 1.43
An investment offers the following: a series of $1000 annual payments, starting one year from now, for a total of 12 payments. If your opportunity cost (as an EAR) is 5%, what is the investment worth to you today? Group of answer choices $11,079.20 $9,214.56 $10,103.26 $8,863.25 $10,241.19 Give typing answer with explanation and conclusion
Company ABC invests in a long-term project that will start generating cash flows 10 years from now (and will then continue generating cash flows forever). The first cash flow is going to be equal to $22 million. Cash flows will then grow 2% per year forever. If the project costs $460 million today, is it a good investment if interest rates are (and are going to be forever) equal to 5%?
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