An investment that costs $22,500 will produce annual cash flows of $4,500 for a period of 6 years. Further, the investment has an expected salvage value of $2,750. Given a desired rate of return of 9%, what will the investment generate? (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Do not round your intermediate calculations. Round your answer to the nearest whole dollar.

An investment that costs $22,500 will produce annual cash flows of $4,500 for a period of 6 years. Further, the investment has an expected salvage value of $2,750. Given a desired rate of return of 9%, what will the investment generate? (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Do not round your intermediate calculations. Round your answer to the nearest whole dollar.

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 an initial cost of $60,000, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 12%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent.
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A project has an initial cost of $40,000, expected net cash inflows of $11,000 per year for 7 years, and a cost of capital of 13%. What is the project's MIRR? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.
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
An investment has an installed cost of $527,630. The cash flows over the four-year life of the investment are projected to be $212,200, $243,800, $203,500 and $167,410, respectively. If the discount rate is 10%, at what discount rate is the NPV just equal to 0? (Input in percentage, keep 2 decimals. e.g. if you got 0.10231, input 10.23) Question 10 The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up". As a result, the cemetery project will provide a net cash inflow of $145,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 4% per year forever. The project requires an initial investment of $1,900,000. The company is somewhat unsure about the assumption of a growth rate of 4% in its cash flows. At what constant growth rate would the company just break even if it still required a return of 11% on investment? (Input in percentage, keep 2 decimals. e.g. if you got…
An investment that costs $25,000 will produce annual cash flows of $5,000 for a period of 6 years. Further, the investment has an expected salvage value of $3,000. Given a desired rate of return of 12%, the investment will generate a (Do not round your PV factors and intermediate calculations. Round your answer to the nearest whole dollar): Multiple Choice negative net present value of $2,923. negative net present value of $1,520. negative net present value of $25,000. positive net present value of $20,557
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A $1,000 investment in project that returns $100/year for 5 years is to be compared with a $700 investment in a project that returns $90/year for 4 years. What would be a good metric(s) for comparing these projects? A. Equivalent uniform annual cash flow, only. B. Internal rate of return (only correct choice of these options) C. Internal rate of return and equivalent uniform annual cash flow D. Benefit to cost ratio and internal rate of return E. Benefit to cost ratio (only correct choice of these options) Give answer fast and only type answer
A project has an initial cost of $55,000, expected net cash inflows of $13,000 per year for 12 years, and a cost of capital of 8%. What is the project's PI? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.
Which of the following describes the NPV decision rule? Accept if the cost of the project is recouped within 3 years. Accept if the PV of the cash inflows of the project divided by the absolute value of the cost of the project is greater than one. Accept if the PV of the cash inflows from the project minus the cost of the project is greater than zero Accept if the average net income from the project divided by the average book value is greater than the target required Accept if the rate of return earned on the project is greater than the required return for the project.
Net Present Value Method, Present Value Index, and Analysis for a service company Continental Railroad Company is evaluating three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows: Ramp Computer Facilities Network $423,052 Amount to be invested Annual net cash flows: Year 1 Year 2 Year 3 Year 1 2 3 4 5 6 7 8 9 10 6% Present Value of $1 at Compound Interest 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 Maintenance Equipment $677,579 0.424 0.386 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 305,000 284,000 259,000 0.361 0.322 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 220,000 198,000 176,000 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 $188,789 125,000 86,000 63,000
Alternative Uno has a first cost of $10,000 and annual expenses of $3000, whereas Alternative Dos has a first cost of $35,000, annual expenses of $2000, and a recurring cost of $5000 every 10 years. If both alternatives have an infinite life, which of the following equations can be used to solve for the rate of return on the incremental investment? (a) 0 = −$25, 000 + $1000/i − $5000(A/F, i, 10) (b) 0 = −$25, 000 + $1000/i + $5000(A/P, i, 10)/i (c) 0 = −$25, 000 + $1000/i − $5000(A/F, i, 10)/i (d) 0 = +$25, 000 − $1000/i + $5000(A/F, i, 10)?

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