### Investment Project AnalysisAn investment project provides the following annual cash inflows over four years respectively: $2,800, $3,700, $5,100, and $4,300. The discount rate applied is 9 percent. We are required to determine the discounted payback period for different initial costs.#### Questions:a. **What is the discounted payback period for these cash flows if the initial cost is $5,200?** *(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 $6,400?** *(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 $10,400?** *(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)*#### Summary Table:| **Question** | **Discounted Payback Period** ||----------------------------------|-------------------------------|| a. Discounted payback period | ______ years || b. Discounted payback period | ______ years || c. Discounted payback period | ______ years |#### Explanation of Graphical Content:In the summary table above, we need to fill in the values of the discounted payback period for each respective initial cost. Each row corresponds to a different initial cost provided in the questions. The columns are designed to capture the answers, in years, for each discounted payback period. This analysis helps in understanding at what point the initial investment is recovered, considering the time value of money.

The payback period method is a very important technique used in capital budgeting for assessing…

Answered: An investment project has annual cash…

An investment project has annual cash inflows of $2,800, $3,700, $: for the next four years, respectively. The discount rate is 9 percent.

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 has estimated annual net cash flows of $11,250 for four years and is estimated to cost $37,500. Assume a minimum acceptable rate of return of 12%. Use Present Value of an Annuity of $1 at Compound Interest table below.
Project A costs $5,200 and will generate annual after-tax net cash inflows of $1,700 for five years. What is the NPV using 5% as the discount rate? Round your present value factor to three decimal places and final answer to the nearest dollar.
A project has estimated annual net cash flows of $147,000 for 4 years and is estimated to cost $475,500. Assume a minimum acceptable rate of return of 10%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine (1) the net present value of the project and (2) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) $fill in the blank 1 Present value index (rounded to two decimal places) fill in the blank 2 Feedback…
An investor pays $275,000 for a mine that will produce level annual revenue for 18 years. What should the level annual revenue be (received at the end of each year) if the investor is to receive 4% annual return on the investment while recovering the principal in a sinking fund earning 2.5% per year?
Consider a project with an initial investment of $300,000, which must befinanced at an interest rate of l2% per year. Assuming that the required repayment period is six years, determine the repayment schedule by identifying the principal as well as the interest payments for each of the following repayment methods:(a) Equal repayment of the principal: $50,000 principal payment each year(b) Equal repayment of the interest: $36,000 interest payment each year(c) Equal annual installments: $72,968 each year
Development costs of a new product are estimated to be $100,000 per year for five years. Annual profits from the sale of the product, estimated to be $75,000, will begin in the fourth year and each year they will increase by ($10,000 + $10,000*4) through year 15. Compute the present value using an interest rate of 10%. Draw a cashflow diagram.
An investment of 1000 is to be used to make payments of 100 at the end of every year for as long as possible. If the fund earns an annual effective rate of interest of 6%, find how many regular payments can be made. Also, find the amount of the smaller payment to be paid on the date of the last regular payment to be paid one year after the last regular payment
An investment pays $4,000 per year at the beginning of each year for the next 4 years and then $6,000 per year at the beginning of each year for the next 6 years. Using a discount rate of 8%, what is the GPV of these payments?
A project requires the following investments: initial investment of $ 3,000,000, from the first month and for 6 consecutive months a monthly investment of $ 350,000. If $6,250,000 is received at the end of the year, what was the monthly rate of return?
For this investment, an initial amount of $25,000 should be paid this year (t=0). As of next year (t=1), five equal payments of $20,000 should also be paid (i.e., from t=1 to t=5). Thus, the sum of the required investment expenditure over those periods is $125,000. How much is the sum of the present value of the required investment expenditure over those periods, assuming that the annual interest rate is 5%?
Cargojet Corp. is preparing for the replacement of one of its jets in three years by making payments to a sinking fund at the beginning of every six months for the next three years. The fund earns 6% compounded semiannually, and the capital required in three years is $750,000. What is the size of the semiannual payment made to the sinking fund? __________ How much of the maturity value of the fund will be interest? __________ Construct a partial sinking fund schedule showing details of the first two and the last two payments and totals. Round the sinking fund payments, interest payments and increases in the fund to the nearest dollar.
The present value of an investment is estimated at about $266, 300. The expected generated free cash flow from the project for next year is $5, 000 and is expected to grow 15% a year for the next four years following the first generated cash flow. After the fifth year (t = 5), the growth rate is expected to be 6% in perpetuity. Estimate the discount rate used in valuing this project

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