Assuming a firm's weighted average cost of capital is 11%, what is the net presentvalue (NPV) of the following project?Year Net Cash Flow-$450,000$150,000$200,000$350,0000123$30,257$130,257O $103,377$553,377

NPV means Net present value.It is calculated by deducting initial investment from present value of…

Answered: Assuming a firm's weighted average cost…

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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Consider the following list of projects: Project Investment ($) 135,000 200,000 125,000 150,000 175,000 75,000 80,000 A B C D E F G H O O Assuming that your capital is constrained, which investment tool should you use to determine the correct investment decisions? Incremental IRR IRR 200,000 50,000 Profitability Index NPV NPV ($) 6000 30,000 20,000 2000 10,000 10,000 9000 20,000 4000
Year Cash Flow (A) Cash Flow (B) 0 −$ 417,000 −$ 36,000 1 48,000 19,600 2 58,000 14,100 3 75,000 14,600 4 532,000 11,400 The required return on these investments is 13 percent. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. What is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. What is the IRR for each project? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. What is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. Based on your answers in (a) through (d), which project will you finally choose?
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Assuming a firm's weighted average cost of capital is 11%, what is the net present value (NPV) of the following project? Year Net Cash Flow -$450,000 $150,000 $200,000 $350,000 0 1 2 3 $30,257 O $130,257 O $103,377 O $553,377