Answered: A project has a required return of 12.6…

A project has a required return of 12.6 percent, an initial cash outflow of $38,100, and cash inflows of $16,500 in Year 1, $11,700 in Year 2, and $10,400 in Year 4. What is the net present value?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 1P: A project has an initial cost of 40,000, expected net cash inflows of 9,000 per year for 7 years,...

See similar textbooks

Related questions

Q: A project has the following cash flows: Year Cash Flows -$ 128,200 0 1 49,400 2 63,800 51,600 28,…

A: Profitability Index is computed as follows:-Profitability Index =

Q: Myca Corporation has a project with the following cash flows. What is the value of the cash flows…

A: The present value of cash flows refers to the value of future cash flows discounted to the present…

Q: You are considering a project with an initial outlay of $ 80,000 and expected cash flows of $ 20,000…

A: Initial Outlay: $80,000 Expected cash flows: $20,000 Number of years: 6 Discount rate: 10%…

Q: A project with an investment of $10,000 has net cash flows of $9, 000, $3,000, and $1,000 for each…

A: Average rate of return =Average net profits/average investment×100Average net profits =Total net…

Q: If a company has a required return of 10% and the following cash flows for a proposed project, what…

A: NPV is Net Present Value refers to the technique used for decision making in capital budgeting by…

Q: (a) Consider a 2-year project requiring a cash injection of $200 immediately and $230 after 1 year…

A: The graph of the NPV versus the required rate of return for the project is shown below-

Q: What is the internal rate of return for a project that cost $50,000 today this project is expected…

A: The internal rate of return is the rate at which net present value becomes zero. Project cost is…

Q: Assuming a discount rate of 1%, what is the net present value (rounded to the nearest whole dollar)…

A: Net Present Value: It refers to the project's or investment's profitability in absolute terms. It…

Q: A project has the following cash flows: Year ON 3 2 Project Cash Flows -$5,987.00 $2,456.00…

A: YearCash flow0-$5,987.001$2,456.002$2,456.003$2,456.004$2,456.00Cost of capital = 10%

Q: Dundonald Inc. has identified an investment project with the following cash flows. If the discount…

A: Future value of stream of uneven cash flows at different discount rate is calculated in excel

Q: A project that provides annual cash flows of $4,300 for eight years with the initial cost of $22,670…

A: Net present value is the difference between the present value of inflows and the present value of…

Q: For a project with an initial investment of $30,000 and cash inflows of $12,000 a year for three…

A: Time Value of Money :— According to this concept, value of money in present day is greater than the…

Q: Question 3: Project K costs $58,631.36, its expected cash inflows are $13,000 per year for 10 years,…

A: Internal rate of return(IRR) is calculated in excel using IRR function as = IRR(Values)

Q: A project will generate the following cash flows. The required rate of return is 15%. If the…

A: Profitability index: Profitability is computed by dividing the present value of cash inflow to…

Q: A project is expected to generate the following cash flow stream. The required rate of returns is 9…

A: Solution:- Present value means the value of cash flows in today's terms by discounting the same at…

Q: A project has an initial cost of $60,000, expected net cash inflows of $13,000 per year for 7 years,…

A: Here, YearCash flows0 $ -60,000.001 $ 13,000.002 $ 13,000.003 $ 13,000.004 $…

Q: 7A- What is the rate of return associated with this project? 9 Year Cash Flow 0 -$225,000 1 85,000 2…

A: Answer image:For the given Cash Flow pattern, the following solution can be found through excel:The…

Q: Fuente, Incorporated, has identified an Investment project with the following cash flows. Year Cash…

A: Future Value -The temporal value of money operates on the straightforward tenet that a dollar spent…

Q: A3 5a. 5. We have two independent and mutually exclusive projects, A and B. Project A requires an…

A: The Net present value means the sum of all the present value of cash-flows being generated from…

Q: A project that provides annual cash flows of $22,500 for 7 years costs $84,000 today. a. If the…

A: >Capital budgeting entails determining which projects are financially feasible and which are…

Q: You've estimated the following cash flows (in $) for two projects: A B C 1 Year Project A Project…

A: IRR is also known as Internal rate of Return. It is a capital budgeting technique which helps in…

Q: Cannonier, Inc., has identified an investment project with the following cash flows: Year Cash Flow…

A: In this question we need to compute the future value after 4 years.

Q: A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 -$31,000 1…

A: Here, YearReturns0 $(31,000.00)1 $21,000.002 $12,000.003 $…

Q: 5. A project has the following after-tax total (or net) cash flows. Year After-tax total (or net)…

A: The objective of the question is to calculate the regular payback period and the discounted payback…

Q: A project with an initial cost of $51,200 is expected to generate annual cash flows of $16,030 for…

A: IRR is also known as Net Present alue. It is a capital budgeting techniques which helps in decision…

Q: You've estimated the following cash flows (in $) for a project: A B 1 Year Cash flow 2 0 -3,000 3…

A: IRRIRR is the required rate of return for the project to have zero Net Present value.IRR can be…

Q: At a required rate of return of 15.0%, Project B's present value is obviously higher than that of…

A: Present value is defined as the current value of an amount or sum of money to be received at some…

Q: What is the NPV of a project with an initial investment of $100, a cash flow in one year of $105,…

A: Net present value is the technique used in capital budgeting to evaluate the acceptability of the…

Q: Cash flows from a new project are expected to be $5,000, $20,000, $30,000, $40,000 and $40,000 over…

A: Net present value (NPV) is a financial metric used to determine the value of an investment by…

Q: Fuente, Incorporated, has identified an investment project with the following cash flows. Cash Flow…

A: The objective of the question is to calculate the future value of cash flows at different discount…

Q: An Investment project provides the cash flow inflows of $615 per year for 8 years. a) What is the…

A: a)Calculation of project payback period:

Q: Myca Corporation has a project with the following cash flows. What is the value of the cash flows…

A: Net Present Value, which is a financial metric used to determine the value of an investment by…

Q: The initial cost of a project is $18 million. If a project returns $3 million at year 1 and that…

A: Payback period refers to the method of capital budgeting used for estimating the period consumed for…

Q: A project that provides annual cash flows of $22,500 for 7 years costs $84,000 today. a. If the…

A: Capital budgeting entails determining which projects are financially feasible and which are not. A…

Q: A project has cash flows of -$148,000, $43,000, $87,000, and $44,000 for Years 0 to 3, respectively.…

A: Step 1 IRR In financial analysis, the internal rate of return (IRR) is a statistic used to calculate…

Q: A project has the following cash flows set out below. What is the profitability index of this…

A: The profitability index is classified as a capital budgeting technique that measures the performance…

Q: A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 −$ 28,000 1…

A: Net Present Value - It is the difference between the present value of cash outflow and present value…

Q: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$…

A: Payback period (PBP) refers to the period or duration within which the company is able to recover…

Q: Suppose a project has the following cash flows. What is the NPV if the cost of the project is…

A: NPV stands for the net present value wherein the present value of cash inflows is equal to the…

Q: A project costing $230,000 has a Net Present Value (NPV) of -$24,400. Which one of the following…

A: Net Present value (NPV) is difference between the Present Value of future cash flows and initial…

Q: A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years,…

A: Net Present Value: Net Present Value is the difference between the present value of cash inflows and…

Q: Question 3: A project requires an immediate investment of $150,000 and another maintenance…

A: Immediate investment = $150,000Maintenance expenditure = $30,000MARR = 12%Number of years = 4To…

Q: A project requires an investment of $1000 and generates a cash flow of $1000 in 1 year and…

A: Given: Year Amount 0 -$1,000 1 $1,000 2 $0 3 $0 4 $0 5 $1,000

Q: Find internal rate of return of a project with an initial cost of $43,000, expected net cash inflows…

A: We can find the internal rate of return for a stream of constant cash flows using RATE function of…

Question

son.3

A project has a required return of 12.6 percent, an initial cash outflow of $38,100, and cash inflows of $16,500 in Year 1, $11,700 in Year 2, and $10,400 in Year 4. What is the net present value?

Definition Definition

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: Net Present Value

VIEW

Step 2: Computation of the net present value of the project using a discount rate of 12.6 percent:

VIEW

Solution

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

A project has a required return of 12.6 %, an initial cash outflow of $43,000, and cash inflows of $16, 500 in Year 1, $11,700 in Year 2, and $10,400 in Year 5 . What is the net present value?
A project will generate the following cash flows. If the required rate of return is 15%, what is the project’s net present value? Year Cash flow 0 –$50,000 1 $15,000 2 $16,000 3 $17,000 4 $18,000 5 $19,000 Select one: a. $16,790.47 b. $6,057.47 c. $3,460.47 d. $1,487.21 e. –$3,072.47
What is the net present value of a project with the following cash flows and a required return of 12%? Year Cash Flow 0 -$ 28,900 1 $ 12,450 2 $ 19,630 3 $ 2,750 The Correct Answer is -$177.62, but how to calculate to arrive at that number.
Assume a project has cash flows of -$54,300, $18,200, $37,300, and $14,300 for Years 0 to 3, respectively. What is the profitability index given a required return of 12.6 percent? 1.02 .95 .98 1.06 ☐ 1.00
A Project with a net investment of $10,000 and net cash flows of $5,000, $4,000, $3,000, $2,000, $1,000 for years 1 through 5 has an internal rate of return of __________ percent. a. 20.27 b. 19.5 c. 18.45 d. 23.5
1. A project has an initial cost of 40,000. The future cash flows are 5,500, 15,200, -3,600, and 32,000 for year 1 to 4 respectively. How many IRRs will this project have? a. 3 b. 1 c. 4 d. 0
Which of the following comes closest to the net present value (NPV) of a project whose initial investment is $5 and which produces two cash flows: the first at the end of year 2 of $3 and the second at the end of year 4 of $7? The required rate of return is 13%? Select one: a. $1.84 b. $0 c. $1.64 d. $2.05 e. $2.26
4. What is the internal rate of return for a project that has a net investment of $14,600 (Time 0 outflow) and a single net cash flow of $25,750 in 6 years? Use excel formula
3. What is the internal rate of return for a project that has a net investment of $14,600 (Time 0 outflow) and a single net cash flow of $25,750 in 5 years? Use excel formulas
A project is expected to generate the following cash flow stream. The required rate of returns is 9 percent. Year 1 Year 2 Year 3 $200,000 $300,000 $400,000 a) Calculate the present value of the above cash flow stream.
At a required rate of return of 15.0%, Project B's present value is obviously higher than that of Project A. How much higher is the present value of Project B's cash flows than Project A's cash flows? Years: 0 1 2 3 Project A's Cash Flows: $0 Project B's Cash Flows: $0 A. $ 1,686 B. $ 2,949 C. $ 5,041 D. $ 7,481 E. $ 9,699 $1,000 $6,000 $2,000 $4,000 $4,000 $2,000 4 $6,000 $1,000
What is the net present value of a project with the following cash flows if the discount rate is 15 percent? Year 0: Cash Flow 5-48,000, Year 1: Cash flow = $15,600, Year 2: Cash flow = $28,900, Year 3: Cash flow = 515, 200 Seleccione una: A. -$1,618.48 B. $1,035.24 C. S9.593.19 D $2,687.98 E. $1,044.16