A project requires a $28,000 initial investment and is expected to generate end-of-period annual cash inflows as follows:Year 1Year 2$ 12,000 $ 13,000Assuming a discount rate of 10%, what is the net present value (rounded to the nearest whole dollar) of this investment? Selected present valuefactors for a single sum are shown in the table below.i = 10%n = 10.9091Multiple ChoiceOi = 10%n = 20.8264O$0Year 3$ 12,000$2,668i = 10%n = 30.75134

NET PRESENT VALUENet Present Value is one of the Important Capital Budgeting Techniques. Net Present…

Answered: A project requires a $28,000 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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Consider a project with the following cash flows in dollars ($): Year Cash Flow0 -15,0001 50002 50003 50004 5000 Assume the appropriate discount rate for this project is 12%. What is the payback period for this project? (Round your answer to the tenths.)
Consider cash flows Year 0: -6900 Y1: 1700 Y2: 2900 Y3: 2900 Y4: 3500 What is the profitability index for this project if the return is 10%
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
An investment will provide the following future cash flows. Year 1 = 5,919 Year 2 = 8,327 Year 3 and 4 = 4,718 Year 5 = 3,048 Using a 9.01% discount rate, what is the present value of this investment?
A project requires a $33,000 initial investment and is expected to generate end-of-period annual cash inflows as follows Year 1 Year 2 $ 15,000 $ 16,000 i = 14% n=1 0.8772 { = 14% n = 2 0.7695 Year 3 $ 15,000 Assuming a discount rate of 14%, what is the net present value (rounded to the nearest whole dollar) of this investment? Selected present value factors for a single sum are shown in the table below. Multiple Choice Help {= 14% n=3 0.6750 Save & Exit Subr
Consider the following cash flow profile and assume MARR is 10%/year. EOY NCF Part a Determine the ERR for this project. 0 1 2 3 4 5 6 % -$50 $32 $32 $32 $32 $32 $32 Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.2.
Consider the following cash flow profile and assume MARR is 10%/year. EOY NCF Part a Part b Part c Determine the IRR for this project. 0 1 2 3 4 5 6 % $-140 $60 $60 $30 $-10 $50 $60 Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.2.
You are evaluating an investment project, which has a cost of $161,000 today and is expected to provide after-tax annual cash flows of $20,000 for seven years. In order to compute the MIRR, you are modifying the cash flows. Assuming the cost of capital is 9.1 percent, what is the terminal cash flow of the modified cash flows? Question 12 options: $173,074 $176,474 $178,474 $180,974 $182,874 $184,574
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
3) Consider the following two projects: Net Cash Flow Each Period Initial Outlay 1 2 3 4 Project A $4,000,000 $2,003,000 $2,003,000 $2,003,000 $2,003,000 Project B $4,000,000 0 0 0 $11,000,000 Calculate the net present value of each of the above projects, assuming a 14 percent discount rate. What is the internal rate of return for each of the above projects? Compare and explain the conflicting rankings of the NPVs and IRRs obtained in parts a and b above. If 14 percent is the required rate of return, and these projects are independent, what decision should be made? If 14 percent is the required rate of return, and the projects are mutually exclusive, what decision should be made?
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A project which requires an investment of OMR 18,000, duration of the project is 2 years, average net cash inflows were OMR 12,000 and annual variable cost is OMR 8,000. Assuming a discount rate at 12%, evaluate the sensitivity of Initial Investment influencing NPV with above information. Select one: O A. 11.25% B. 12.67% O C. 16.87% D. 6.75%

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