A potential project has a net present value (NPV) of $28,356. This amount includes the initial cash outlay of $30,000. The correct decision would be to: proceed with the project because the NPV is positive. O cancel the project because the NPV is lower than the initial cash outlay.

A potential project has a net present value (NPV) of $28,356. This amount includes the initial cash outlay of $30,000. The correct decision would be to: proceed with the project because the NPV is positive. O cancel the project because the NPV is lower than the initial cash outlay.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 15PROB

See similar textbooks

Related questions

Q: The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate…

A: The below expression can be used to calculated MIRR:

Q: If the decision is made by choosing the project with the higher IRR, how much value will be forgone?

A: IRR is the internal rate of return. At this rate the NPV of the project is 0. If the IRR is greater…

Q: Galaxy Inc. is considering Projects S and L, whose cash flows are shown below. These projects are…

A: We have a typical capital budgeting projects. We have to see how much is the value lost if one is…

Q: Praxis Corp. has to choose between two mutually exclusive projects. If it chooses project A, Praxis…

A: The objective of the question is to calculate the difference in the net present value (NPV) of two…

Q: A firm evaluates all of its projects by applying the NPV decision rule. A project under…

A: Net present value is the sum of value of cash flows discounted to present value at a given discount…

Q: Project A has an internal rate of return (IRR) of 15 percent. Project B has an IRR of 14 percent.…

A: Here,IRR of Project A is 15%IRR of Project B is 14%Required Return is 12%Projects are not mutually…

Q: 1. A project that provides annual cash flows of $53,500 for 10 years costs $308,000 today. (1) Based…

A: NPV is the best capital budgeting tool to evaluate a project. It is the present value of cash…

Q: capital of 8% which pet is 500,000 and with the following future cash flows in years one through…

A: NPV, or Net Present Value, is a financial metric used to determine the profitability of an…

Q: The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate…

A: IRR is the internal rate of return. It is the rate at which net present value is equal to 0.

Q: RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 2…

A: NPV means Net present value.It is a capital budgeting technique used for making investment…

Q: Rockmont Recreation Inc. is considering a project that has the following cash flow and WACC data.…

A: Cash Flow for Year 0 = cf0 = -$1000Cash Flow for Year 1 = cf1 = $450Cash Flow for Year 2 = cf2 =…

Q: Consider a project with free cash flow in one year of $139,138 or $187,005, with either outcome…

A: IntroductionStep 1Given,cashflows at weak economy is $148,100Cash flow at strong economy is…

Q: A firm evaluates all of its projects by applying the NPV decision rule. A project under…

A: The net present value of the project represents the present worth of the project and NPV helps…

Q: RiverRocks, Inc., is considering a project with the following projected free cash flows: Year Cash…

A: Net Present Value is used to evaluate the investment and financing decisions that involve cash flows…

Q: Which of the following statements is incorrect regarding project appraisal techniques? At IRR, the…

A: Net Present Value ("NPV"), Internal Rate of Return ("IRR") and Profitability Index ("PI") are all…

Q: Which of the following statements best describes the difference between the IRR method and the MIRR…

A: Note: As per the policy, we are supposed to solve one question at a time. Kindly repost the further…

Q: Which of the following describes the NPV decision rule? Accept if the cost of the project is…

A: Net present value is difference between present value of cash flow minus initial investment in the…

Q: Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are…

A: Capital budgeting provides numerous benefits to companies, including efficient resource allocation,…

Q: A firm evaluates all of its projects by applying the NPV decision rule. A project under…

A: Net Present value is the sum of the present value of all cash out flows and inflows. If NPV is…

Q: itive cash flows of $65 for four years. Project Y has an initial investment of $88 and annual…

A: We need to compute the Internal rate of return (IRR) for both the projects. Internal rate of return…

Q: The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate…

A: Internal rate of return refers to the minimum return to be earned over an investment made by the…

Q: If the profitability index of a normal investment project is 0.5 and the initial investment required…

A: A Profitability index is a useful tool that is used by the management in order to the ranking of the…

Q: Trovato Corporation is considering a project that would require an investment of $65,000. No other…

A: Capital budgeting: It is a method of evaluating the projects which required huge investments and…

Q: Allied Biscuit Co. has to choose between two mutually exclusive projects. If it chooses project A,…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are…

A: Here 2 projects S and L are mutually exclusive and equally risky, one of them with high MIRR will be…

Q: Find the modified internal rate of return (MIRR) for a proposed project costing $12,513. Assume that…

A: MIRR stands for modified internal rate of return.It is an important capital budgeting tool.

Q: Would you accept a project where you had an initial investment of $10,000,000 but the NPV was only…

A: Solution:- Net Present Value (NPV) means the net value in today’s term after deducting present value…

Q: he IRR evaluation method assumes that cash flows from the project are reinvested at the same rate…

A: Capital budgeting refers to the financial technique that is helpful in taking the decisions by…

Q: A firm evaluates all its projects by applying the IRR rule. the current proposed project has a cash…

A: IRR is the rate at which present value of cash inflows will be equal to initial cost. If IRR is…

Q: A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the…

A: Internal rate of return is the rate of return where the net present value of the project is zero.

Q: Praxis Corp. has to choose between two mutually exclusive projects. If it chooses project A, Praxis…

A: The collection of all tools used to assess prospective investments are called capital budgeting…

Q: What is the cash flow from assets in 2011? Question 10Answer a. $2,247 b. $3,915 c.…

A: Part 2: Explanation:Step 1: Calculate Net Working Capital (NWC)NWC = Current Assets - Current…

Q: Project X has the following cash flows: C0 = -1,250, C1 = 750, and C2 = 900. If the IRR of the…

A: Solution:Internal Rate of Return (IRR) is the rate of return the project is yielding.

Q: n investment of $62,000. No other cash outflows would be involved. Th he project is closest to…

A: Profitability index measures the attractiveness of an investment by dividing the present value of…

Q: A project has an up-front cost of sh.1000, 000. The project's WACC is 12% and its net present value…

A: Present worth (NPV) will be the difference between total present worth of cash inflows and total…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

A potential project has a net present value (NPV) of $28,356. This amount includes
the initial cash outlay of $30,000.
The correct decision would be to:
O proceed with the project because the NPV is positive.
cancel the project because the NPV is lower than the initial cash outlay.

Calculate the payback period for a project that costs $65,000 and returns $24,000 at
the end of each year.
Express your answer in years rounded to 2 decimal places.
Your Answer:
Answer

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Accept or reject?

VIEW

Step 3: Calculation of Payback period

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Help please
Can you calculate the equivalent annual annuity of Project A? . rate is 5%. Assume the discount Year Project A Project B $(199,794) $(101,712) 1 $49,653 $81,925 $48,712 $82,092 $55,726 $90,394 4 $79,174 $53,675 $34,961 Round your answer to the nearest two decimals if needed. Do not type the $ symbol.
Find the future value of the given present value. Use 360 days per year for your calculation.The present value of $3684 at 11% for 240 days.
Please Solve In 20mins
Find the final amount in the following retirement account, in which the rate of return on the account and the regular contribution change over time. $649 per month invested at 6%, compounded monthly, for 5 years; then $774 per month invested at 7%, compounded monthly, for 5 years. What is the amount in the account after 10 years? (Round to the nearest dollar as needed.)
If you invest $9,700 per period for the following number of periods, how much would you have received at the end? Use Appendix C. (Round "Factor" to 3 decimal places. Round the final answers to the nearest whole dollar.) a. 11 years at 9 percent Future value $ b. 16 years at 11 percent Future value $ c. 30 periods at 10 percent Future value $
Answer the following questions using Excel's RATE, NPER, PMT, PV and FV functions. 1. If you contribute $1000.00 into an RRSP every six months for fifteen years and interest on the deposits is 8% compounded semi-annually, how much would the balance in the RRSP be after the last contribution?
Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent. $300 per year for 2 years at 6%. $150 per year for 1 year at 3%. $200 per year for 6 years at 0%.
How much must be invested now to receive $23,000 for 10 years if the first $23,000 is received one year from now and the rate is 10%? Round your present value factor to three decimal places and final answer to the nearest dollar. (Click here to see present value and future value tables) $fill in the blank 1
Compute the present value of an annuity of $621 per year for 25 years, given a discount rate of 6 percent per annum. Assume that the first cash flow will occur one year from today (that is, at t = 1). Round your answer to 2 decimal places; record your answer without commas and without a dollar sign. Your Answer: Answer
Suppose today you signed a contract for a special assignment over the next 6 years. You will be paid $11492 at the end of each year. If your required rate of return is 11%, what is this contract worth today? (Show your answer to the nearest cent. Round your answer to the nearest 2 decimal places. DO NOT round until after all calculations have been completed and you have reached your final answer.)
Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due. Future value of $800 per year for 10 years at 12%: $ Future value of $400 per year for 5 years at 6%: $ Future value of $800 per year for 5 years at 0%: $