are considering an investment to a project that can generate yearly income of $10,000. If there is a 25% chance that the market crashes so that the income drops by 30%, what would your expected income be? Please use hand calculations.
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A: Initial Cost = $675,000 Annual cash flow = $ 82,000
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You are considering an investment to a project that can generate yearly income of $10,000. If there is a 25% chance that the market crashes so that the income drops by 30%, what would your expected income be? Please use hand calculations.
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- You have a project that has an initial cost of $675,000. It is expected to earn $82,000 annually for the indefinite future. Using a cumulative cashflow curve or the formula, calculate its simple breakeven point. If the simple breakeven were shorter, how would it affect your recommendation and why?You are considering opening a new plant. The plant will cost $98.2 million upfront. After that, it is expected to produce profits of $30.2 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 6.6%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. Calculate the NPV of this investment opportunity if your cost of capital is 6.6%. The NPV of this investment opportunity is $ million. (Round to one decimal place.)Can you answer these in Excel (and show any calculation formulas). See the attached image for the information. 1. What is the payack period, NPV, IRR? 2. What happens to the NPV and IRR if initial capital goes up 30%? 3. How much would the selling price have to increase to compensate for 30% in capital costs to the original level in 1.? 4. What is your recomendation?
- You are considering a risk-free investment that costs $4000 and pays $5000 in one year. You can either pay all cash for the investment or you can borrow part and pay cash for the other part. If you borrow $2000, you will be required to pay back $2080 in one year. The risk-free rate is 4%. What is the project’s NPV? Is the NPV affected if you borrow some of the funds?You are considering opening a new plant. The plant will cost $100.0 million upfront. After that, it is expected to produce profits of $30.0 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8.0%. Should you make the investment? Calculate the IRR. Use the IRR to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.You are considering an investment that will cost $15,000 and generate returns of $4,000 at the end of year 1, $5,000 at the end of year 2, $6,000 at the end of year 3 and $3,000 at the end of year 4. Calculate the NPV of the investment using a cost of capital of j=7.0%. Round your answer to the nearest dollar. Your Answer:
- You are considering opening a new plant. The plant will cost $98.6 million upfront. After that, it is expected to produce profits of $29.9 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8.1%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.Assume that you have two investment alternatives: the first project produces $125 for sure, and the second project produces $150 with probability 2/5. You can borrow $110 from your financial institution for one project (investment) if you show an asset as a collateral. Suppose that you maximize your expected profit, what would be the minimum level of collateral that make you select the safe project?Your boss has just presented you with the summary in the accompanying table of projected costs and annual receipts for a new product line. He asks you to calculate the IRR for this investment opportunity. What would you present to your boss, and how would you explain the results of your analysis? (It is widely known that the boss likes to see graphs of PW versus interest rate for this type of problem.) The company’s MARR is 10% per year.
- You are considering opening a new plant. The plant will cost $103.2 million upfront. After that, it is expected to produce profits of $30.9 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8.6%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. If your cost of capital is 8.6%, the NPV of this investment opportunity is S Should you make the investment? (Select the best choice below.) O A. Yes, because the project will generate cash flows forever. O B. No, because the NPV is not greater than the initial costs. O C. Yes, because the NPV is positive. O D. No, because the NPV is less than zero. million. (Round to one decimal place.) The IRR of the investment is %. (Round to two decimal places.) The maximum deviation allowable in the cost of capital is %. (Round to two…You are considering opening a new plant. The plant will cost $98.52 million up front and will take one year to build. After that, it is expected to produce profits of $30.46 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8.25%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. The NPV of the project will be $ million. (Round to two decimal places.)Perform a financial analysis for an IT Project which requires an initial investment of $32,000, but it is expected to generate revenues of S10,000, $20,000 and $15,000 for the first, second and third years respectively. The target rate of return is 12%. Write the formula and calculate the Net Present Value (NPV). In addition, Justify your result. (For this question Write the answer on the paper and take photo and upload OR Type in the MS Word document and upload the file) tach File Browse My Computer
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