### Investment Net Present Value CalculationAn investment costing $33,000 will generate annual cash flows of $11,020 over a period of 4 years. Considering a desired rate of return of 9%, calculate the net present value (NPV) of the investment. (Utilize the present value of $1 (PV of $1) and the present value annuity of $1 (PVA of $1) factors from the tables provided. Do not round intermediate calculations, and round your final answer to the nearest dollar.)#### Multiple Choice Options:- ○ A positive net present value of $35,702.- ○ A negative net present value of $35,702.- ● A negative net present value of $2,702.- ○ A positive net present value of $2,702.The correct answer selection is indicated by a filled circle next to the third option: **A negative net present value of $2,702.**This exercise emphasizes the importance of understanding net present value as a financial metric employed to assess the profitability of an investment under the specified conditions.

Net present value = Present value of annual cash inflows - Initial investment where, Present value…

Answered: An investment that costs $33,000 will…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please do not give solution in image formate thanku An investment generates the following monthly returns: 10.25%, -8.90%, 7.48%, 8.90%, 7.30%, 5.80%. Comparing with a risk-free benchmark rate of 5% for the time period, the investment is successful (i.e., investment return > 5%).
The five alternatives shown below are being evaluated by the rate of return method. Incremental ROR when compared with alternative B C D 27.3 9.4 35.3 25 E 1.5 38.5 24.4 Alt B D E Initial Invest, $ ROR vs DN,% 9.6 15.1 -25,000 -35,000 -40,000 -60,000 -75,000 13.4 25.4 20.2 A --- --- (d) Alt D 46.5 27.3 6.8 ... If the projects are mutually exclusive and the Minimum Attractive Rate of Return is 9.2% per year, the best alternative is: (a) Alt A (b) Alt B (c) Alt C (e) Alt E
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
Suppose an investment has an initial capital cost of $1100, an ongoing cost of $6.50 per year and an annual benefit of $80. If the project lasts for 20 years and the discount rate is 7%, the internal rate of return is: Provide your answer in percentage form (e.g. an IRR of 17.66% should be entered as 17.66) to 2 decimal places. Do not include any $ or % 's in your response.
Compute the value of a real option using the following information: PV(project cash flows) = 51.6, NPV(project cash flows) = 1.6, Project upfront cost = 50, Risk-free rate = 4%, NPV volatility = 45.9%, Years to expiration = 1, d1 = 0.0674, d2 = -0.3795, N(d1) = 0.5269, N(d2) = 0.3522, el-04"1) – 0.960789 Round your answer to two decimal places, e.g. 92.993 --> 92.99, 92.987 --> 92.99
An investment under consideration has a payback of seven years and a cost of $884,000. Assume the cash flows are conventional. If the required return is 11 percent, what is the worst-case NPV? (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.)
Project X has an initial investment at time O of $1,000 and it returns $250 one year from now and$1,000 two years from now. Project Y has an initial investment at time O of $2,000 and it returns$2,534.40 two years from now. The risk level and the net present values of the two projects areequal. Calculate the required return for project X. Answer: 12% please do not solve with excel
An investment has an installed cost of $565,382. The cash flows over the four-year life of the investment are projected to be $194,584, $238,318, $186,674, and $154,313. If the discount rate is zero, what is the NPV? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. If the discount rate is infinite, what is the NPV? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. At what discount rate is the NPV just equal to zero? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
A project has an initial investment of $104. You have come up with the following estimates of the project's cash flows (there are no taxes): Revenues Costs Pessimistic Most Likely $17 12 Multiple Choice Suppose the cash flows are perpetuities and the cost of capital is 10 percent. Conduct a sensitivity analysis of the project's NPV to variations in revenues. (Answers appear in order: [Pessimistic, Most Likely, Optimistic].) -$104,-$34, $76 -$34, $36, $66 -$54, $66, $66 $24 10
For the following table, assume a MARR of 15%per year and a useful life for each alternative of eightyears which equals the study period. The rank-orderof alternatives from least capital investment to greatestcapital investment is Z → Y → W → X. Completethe incremental analysis by selecting the preferredalternative. “Do nothing” is not an option. (6.4)FE PRACTICE PROBLEMS 307Z → Y Y → W W → X! Capital −$250 −$400 −$550investment! Annual cost 70 90 15savings! Market 100 50 200value! PW(15%) 97 20 ???(a) Alternative W (b) Alternative X(c) Alternative Y (d) Alternative ZThe following mutually exclusive investment alternatives have been presented to you.
The following two alternatives are given. Data A B. First Cost $8,200 $5,600 Annual Cost $1,000 $800 Annual Benefit $2,700 $2,100 Life, Years 7. Salvage Value $2,800 $1,000 Assume that MARR is 15%. Use the incremental rate of return analysis to determine which alternative (A or B) one should choose. Find the AIRR, or a range of AIRR. O 10% O 10-12% O 12-15% O > 15%
Compare alternatives A and B with the present worth method if the MARR is 14% per year. Which one would you recommend? Assume repeatability and a study period of 16 years. Capital Investment Operating Costs The PW of Alternative A is $ - 108236. (Round to the nearest dollar.) The PW of Alternative B is $ -95429. (Round to the nearest dollar.) Alternative B should be selected. A $55,000 $6,000 at end of year 1 and increasing by $600 per year thereafter $6,000 every 4 years 16 years $12,000 if just overhauled Overhaul Costs Life Salvage Value Click the icon to view the interest and annuity table for discrete compounding when the MARR is 14% per year. B $15,000 $12,000 at end of year 1 and increasing by $1,200 per year thereafter None 8 years negligible D

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