A project is expected to create operating cash flows of $25,300 a year for four years. The fixed assets required for the project cost $60,000 and will be worthless at the end of the project. An additional $3,000 of net working capital will be required when the project starts and will be fully recovered at the end of the project. What is the project's net present value if the required rate of return is 12 percent? O $14,028.18 O $15.751.49 O $16,954.17 O $17,396.31

A project is expected to create operating cash flows of $25,300 a year for four years. The fixed assets required for the project cost $60,000 and will be worthless at the end of the project. An additional $3,000 of net working capital will be required when the project starts and will be fully recovered at the end of the project. What is the project's net present value if the required rate of return is 12 percent? O $14,028.18 O $15.751.49 O $16,954.17 O $17,396.31

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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A project that will provde annual cash flows of $3,050 for nine years costs $10,200 today. a. At a required return of 11 percent, what is the NPV of the project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. At a required return of 27 percent, what is the NPV of the project? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. At what discount rate would you be indifferent between accepting the project and rejecting it? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. NPV b. NPV c. Discount rate %
A two-year project has an initial investment of $38,643,310 and involves both a cash inflow and outflow. The cash inflow of $62,423,810 occurs at the end of year 1, while the cash outflow of $11,890,200 occurs at the end of year 2. The required rate of return is 13.5%. What is the NPV of the project? Options $7,122,513 $7,300,576 $7,478,639 $7,656,702 $7,834,764
A project will produce an operating cash flow of $78,900 a year for five years. The initial cash outlay for equipment will be $110,530. The net after-tax salvage value of $33,147 will be received at the end of the project. The project requires $17,938 of net working capital that will be fully recovered at the end of the project. What is the net present value of the project if the required rate of return is 12 percent?
A project that provides annual cash flows of $22,500 for 7 years costs $84,000 today. a. If the required return is 12 percent, what is the NPV for this project? b. Determine the IRR for this project.
A project that will provde annual cash flows of $2,550 for nine years costs $10,500 today. a. At a required return of 11 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At a required return of 27 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. NPV b. NPV c. Discount rate
A 7-year project is expected to provide annual sales of $221,000 with costs of $97,500. The equipment necessary for the project will cost $360,000 and will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-15 percent. The tax rate is 35 percent. What is the annual operating cash flow for the worst-case scenario?
A project requires an initial outlay of - $822,000. Expected cash flows in each of the next four years are $383,000; $ 161,000; $163,000; and $320,000. If the cost of capital is 14%, what is the project's NPV? Round your answer to the nearest penny. Be sure you enter a negative sign (-) if your answer is a negative number.
What is the NPV of a project that costs $38,000 today and is expected to generate annual cash inflows of $9,000 for the next 7 years, followed by a final inflow of $15,000 in year 8. Cost of capital is 7.4%. Round to the nearest cent.
) A company requires an initial investment of $75,000 with a residual value of $12,500 after five years. The estimated annual returns over the five years are $20,000 at 12% compounded annually. What is the net present value of this project? ____________ b. What is the project’s internal rate of return (IRR)? __________
A project has an initial cost of $45,000, expected net cash inflows of $9,000 per year for 10 years, and a cost of capital of 10%. What is the project's MIRR?
Niagra Falls Power and Light is considering a project that will produce annual cash flows of $37,500, $46,200, $56,900, and $22,400 over the next four years, respectively. What is the internal rate of return if the project has an initial cost of $113,500?
Project A requires an original investment of $64,300. The project will yield cash flows of $19,600 per year for seven years. Project B has a calculated net present value of $3,760 over a four-year life. Project A could be sold at the end of four years for a price of $14,000. Below is a table for the present value of $1 at Compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Use the tables above. (a) Using the present value tables above, determine the net present value of Project A over a four-year life with salvage value assuming a minimum rate of return of 12%. Round your answer to two decimal places. Enter negative values as negative numbers.$fill in the blank 1 (b) Which…

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