A project will produce cash inflows of $2,800 a year for 4 years with a final cash inflow of $5,700 in year 5. The project's initial cost is $9,500. What is the net present value of this project if the required rate of return is 16 percent? a. $11,168.02 b. $4,650.11 c. $1,048.75 d. -$311.02

A project will produce cash inflows of $2,800 a year for 4 years with a final cash inflow of $5,700 in year 5. The project's initial cost is $9,500. What is the net present value of this project if the required rate of return is 16 percent? a. $11,168.02 b. $4,650.11 c. $1,048.75 d. -$311.02

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

See similar textbooks

Related questions

Q: A project that provides annual cash flows of $2,500 for 10 years costs $10,000 today. At a required…

A: NPV. Net present value (NPV) is calculated by deducting initial investment from present value of…

Q: A project will have annual operating cash flows of $36,500 for four years. At the beginning of the…

A: Net Present Value (NPV) = Present Value of Cash Inflows - Initial Investment

Q: The total investment required for a project is estimated at OMR 90, 000. The cash flows expected…

A: Investment = 90000 Free cash flow (year 1) = 18000 Balance after 1 year= 90000-18000=72000 Free cash…

Q: An investment costs $500,000 today and is expected to produce a one-time inflow at the end of year 8…

A: Investment amount (P) = $ 500000 Cash inflow after 8 years (FV) = $ 600000 Period (n) = 8 Years

Q: A project will produce cash inflows of $5.400 per year for 3 years with a final cash inflow of…

A: NPV calculates the present value of cash inflows minus the present value of cash outflows. The…

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: Which of the following values comes closest to the payback of a project that requires an initial…

A: here below is the table to find no of years year cashflows…

Q: Cash flows from a new project are expected to be $4,000, $6,000, $8,000, and $12,000 over the next 4…

A: Required return = 16% Statement of cash flows Year flow 0 -14000 1 4000 2 6000 3 8000…

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: Firm x has made an investment of $ 300.000 . It is thought that the project will provide $170.000…

A: Present value is the sum of future cashflows discounted at discount rate

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: Scenario 2: A project requires an initial investment of $95,000 and is expected to generate the…

A: Initial investment = $95,000Cash flow in year 1 = $20,000Cash flow in year 2 = $30,000Cash flow in…

Q: 7.

A: The objective of this question is to find out the maximum initial investment that would make the…

Q: You are considering a capital project that requires an initial investment of $ 40,000 , has…

A: Present value of annual cash flows = Annual Cash Flow × Present value annuity factor of year 4 at…

Q: What is the net present value of a project that has an initial cost of $40,000 and produces cash…

A: Initial Cost is $40,000 Cash Inflows of $8,500 for 10 years. Discount rate is 12.68% To Find:- Net…

Q: Cash flows from a new project are expected to be $4,000, $5,000, and $3,000 over the next 3 years,…

A: To calculate the PI ratio we will use the below formula PI = Present value of cash inflows/Initial…

Q: Payback period, NPV, PI, and IRR calculations) You are considering a project with an initial cash…

A: Step 1: The calculation of the Payback period, NPV, PI, and the IRR AB1initial investment $…

Q: A project with the required rate of return of 11.2% provides annual cash flows of $2,810 during the…

A: Year Cash flow 0 -12200 1 2810 2 2810 3 2810 4 0 5 0 6 5550 7 5550

Q: A project requires a $802,000 Initial Investment for equipment. The equipment is estimated to have…

A: The accounting rate of return helps to determine the annual percentage of the project which is…

Q: Initial cash outlay is $50,000. The required rate of return is 9%. The length of time of the…

A: Solution:Net Present Value (NPV) means the net present value of cash inflows from the project after…

Q: margin of $6, projected fixed cos ost per unit of $ 12, and a projected present value break-eve…

A: Note : As per the guidelines, only first question will be answered. Kindly post the remaining parts…

Q: AASBC is considering a project that has the following cash flow stream. Year 2 3 Cash Flows 0…

A: The Internal Rate of Return (IRR) is a financial metric that represents the discount rate at which…

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: Consider a project in which the initial after-tax investment is $80,000. The predicted after-tax…

A: Internal rate of return refers to the minimum rate to be earned by the investors in a definite…

Q: Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the…

A: >Please refer to the below spreadsheet for calculation and answer. Cell reference was also…

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 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: Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the…

A: Calculation of Payback Period:The payback period is 2.48 years.The project should be Accepted since…

Q: A project has an initial cost of 40,000. The future cash flows are 5,500, 15,200, -3,600, and 32,000…

A: Internal Rate of Return (IRR) is one of the capital budgeting approaches used to assess the…

Q: An investment project provides cash inflows of $950 per year for eight years. a. What is the project…

A: Payback period is the period in which the initial investment is recovered by the entity. Shorter the…

Q: What is the net present value of a project

A: While choosing which investment project will be undertaken, different investment appraisal…

Q: XYZ is evaluating a project that would last for 3 years. The project's cost of capital is 15.60…

A: The NPV of the project refers to the profitability of the project that is measured by discounting…

Q: A project is expected to produce cash inflows of $5,000 for seven years. What is the maximum amount…

A: The Net Present Value (NPV) method serves as a financial tool for evaluating the profitability of an…

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: You wish to evaluate a project requiring a $59,900 initial investment and having a useful life of…

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

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…

Q: You have been offered a p rate of return to your inves

A: The time value of money is a concept in finance that considers the idea that a sum of money has…

Q: A project that provides annual cash flows of $20,000 for 6 years costs $63,000 today. a. If the…

A: Capital budgeting is a process of allocating the company's resources into profit-generating…

Q: A project has an initial cost of $55,000, expected net cash inflows of $11,000 per year for 10…

A: Initial cost = $55,000Cash inflow per year for 10 years = $11,000

Question

$11,168.02

$4,650.11

$1,048.75

-$311.02

Definition Definition Transfer of funds into a company by any third party, which may happen due to any operational, investing, and financing activities. The cash inflow includes payments made by customers or investments made by the investors into the company by purchasing its equity.

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

Given Information:

VIEW

Calculations are as follow:

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

The initial cost of Project X is $200,000 and its annual generated income is $49,000. The initial cost of a Project Y is $450,000 and the annual generated income is $117,000. If the service life is 8 years, what is the incremental internal rate of return? A value between 20% and 21% A value between 23% and 24% A value between 22% and 23% A value between 21% and 22%
Find internal rate of return of a project with an initial cost of $43,000, expected net cash inflows of $9,550 per year for 8 years, and a cost of capital of 10.50%.Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72. Group of answer choices 15.05% 14.60% 14.90% 16.24% 17.73%
H
An investment project provides cash inflows of $740 per year for 9 years. What is the project payback period if the initial cost is $1,480? A. 2.00 years B. 2.02 years C. 1.90 years D. 1.94 years E. 2.04 years What is the project payback period if the initial cost is $4,958? A. 6.70 years B. 6.77 years C. 6.37 years D. 6.83 years E. 6.50 years What is the project payback period if the initial cost is $7,400? A. 3.01 years B. Never C. 4.95 years D. 5.25 years E. 1.35 years
IRR A project has an initial cost of $45,000, expected net cash inflows of $10,000 per year for 8 years, and a cost of capital of 10%. What is the project's IRR? Round your answer to two decimal places. %
A project is estimated to cost $251,272 and provide annual net cash flows of $56,000 for eight years. Determine the internal rate of return for this project, using the Present Value of an Annuity of $1 at Compound Interest table shown above.
u) Project P rcquires an mycsiment of $95,000 and is expected to produce cash inflow of $20,000 per ycar for 8 years. The cost of capital is 11% Required: a) Pay-back period b) NPV c) PI d) IRR Should you acccpt the project? Why or why not?
Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$2,300 $870 $870 $780 $560 $360
Compute the payback statistic for Project A if the appropriate cost of capital is 9 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$2,100 $790 $810 $740 $520 $320 Payback: ? Years
Explain well with proper answer.
A project has an initial cost of $35,000 and produces cash flows of $20,000, $15,000, $10,000, and $5,000 over the next four years, respectively. The project requires a 13 percent rate of return and has a required discounted payback period of three years. Should the project be accepted? Why or why not?
You are considering a project with an initial cost of $8245 and a required return of 11.6%. What is the discounted payback if the expected cash flows are $3148, $3429, $2731, $3048, and $3930 respectively over the next 5 years? a. 3.66 years b. 3.66 years c. 3.36 years ✔ d. 2.96 years e. 2.98 years

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS