Need help please show all work neatly. ThanksA four-year life project has an initial capital expenditure of $3,000 and annualoperating costs beginning at the end of the year 1 of $2,000. At the end of the yearsof 2, 3, and 4 the project receives $7,000 as income. Assume that the cash flows givenare in today dollars, and that incomes are escalated at 5%, costs are escalated at 6%.and inflation is 3%. Calculate the IRR in constant dollar.O 57%O 25%O 34%O 15%

Initial Capital expenditure(CAPEX) is $3000 Operating cost starting from end of 1st year is $2000…

Answered: A four-year life project has an initial…

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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An investment project has annual cash inflows of $4,400, $3,900, $5,100, and $4,300, for the next four years, respectively. The discount rate is 14 percent. a. What is the discounted payback period for these cash flows if the initial cost is $5,700? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period for these cash flows if the initial cost is $7,800? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the discounted payback period for these cash flows if the initial cost is $10,800? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Discounted payback period years b. Discounted payback period years C. Discounted payback period years
A project has an initial cost of $7,000. The cash inflows are $1,000, $2,600, $3,000, and $4,000 over the next four years, respectively. What is the payback period? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
A project has the following cash flows. It costs $15,000. It briongs in $22,000 after one year, and costs an adittional $6,500 after two years. The Required rate of return is 11%. Calculate the MIRR using the combination approach.
Perform a financial analysis for a project. Assume that the projected costs and benefits for this project are spread over 6 years as follows. Estimated costs are $1,100,000 in Year 0, and $50,000 each year in Years 1, 2, 3, 4, 5 and 6. Estimated benefits are $0 in Year 0, and $450,000 each year in Years 1, 2, 3, 4, 5 and 6. Use a 15% discount rate. Suppose the required payback period and discounted payback period are both 3 years. (1) Calculate the payback period (based on the original cash flows without discounting), and evaluate the project based on the payback method. (2) Calculate the discounted payback period (based on discounted cash flows), and evaluate the project based on the discounted payback method. (3) Evaluate the project using the NPV method, and explain whether you would recommend investing in this project.
A project with an initial outlay of $400 has an economic life of 5 years. The project after-tax cash flows are $150 in Years 1 & 2, then after-tax cash flows of $100 in Years 3 through 5. Calculate the internal rate of return, net present value and profitability index using an interest rate of 12%.
A project has estimated to cost $64,025. and provide annual net cash flows of $15,000 for 6 years. Determine the internal rate of return for this project.
A project requires a $41,000 initial investment and is expected to generate end-of-period annual cash inflows of $18,500 for each of three years. Assuming a discount rate of 13%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below: - 138 í = 138 n=2 1-13% n=3 n 1 0.8850 0.7831 0.6931
7
For a project that has a net investment of $1,500,000 and net cash flows of $400,000 for 5 years; Is the internal rate of return between (15% and 12%) or (10% and 12%). Explain your answer
Development costs of a new product are estimated to be $100,000 per year for five years. Annual profits from the sale of the product, estimated to be $75,000, will begin in the fourth year and each year they will increase by ($10,000 + $10,000*4) through year 15. Compute the present value using an interest rate of 10%. Draw a cashflow diagram.
Perform a financial analysis for a project. Assume that the projected costs and benefits for this project are spread over four years as follows: Estimated costs are $300,000 in Year 1 and $ 75,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $110,000 each year in Years 2, 3, and 4. Use a 6 percent discount rate, and round the discount factors to two decimal places. What is the Return on Investment (ROI)? (Keep your answer in two decimal places. e.g. 46.59. Do not enter % symbol.)
An investment project costs $15,600 and has annual cash flows of $3,900 for six years. a. What is the discounted payback period if the discount rate is zero percent? Discounted payback period b. What is the discounted payback period if the discount rate is 6 percent? Discounted payback period

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