At an interest rate of 12% per year, the cash inflows generated by a gold mining operation are expected to be $225,000 starting in the fifth year, then annually decreasing in a uniform manner to reach Zero at the end of year 19. Draw the CFD and calculate the: a) gradient, b) overall equivalent annual worth.

At an interest rate of 12% per year, the cash inflows generated by a gold mining operation are expected to be $225,000 starting in the fifth year, then annually decreasing in a uniform manner to reach Zero at the end of year 19. Draw the CFD and calculate the: a) gradient, b) overall equivalent annual worth.

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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Vijay
A certain project requires an immediate cash outflow of $4 million. At the end of each of the next four years, the investment will generate cash inflows of $1.5 million. That is at the end of each years, 1st, 2nd, 3rd and 4th year cash inflows is $1.5 million. Inflation rate is expected to be 5% per year during the next four year period. Assuming the cash flows are in nominal terms, what will be the project's NPV is you required 5% realrateof return?
The cash flow associated with a stripper oil well is expected to be $4,000 in month one, $3,925 in month two, and amounts decreasing by $75 each month through year five. At an interest rate of 0.13 per year compounded monthly, the equivalent uniform monthly cash flow is?
An engineering project has an investment amount of $126379 with an annual net profit of $53949 for 6 years. If the interest rate and average inflation rate are 15% and 6%, respectively, calculate the present worth of the entire period.
A project has estimated annual net cash flows of $57, 600. It is estimated to cost $288,000. Determine the cash payback period. Round the answer to one decimal place. years
Calculate Internal Rate of Return to the investor based on a sale of the project at 12/31/26 using a 6.75% Cap Rate as sale value and 2% closing costs. Assume minimum $10,000 working capital at end of every year. All other cash flow is Distributable to investor.
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.
Construct a cash flow diagram to find the present worth of a future outflow of $40,000 in year 5 at an interest rate of 15% per year.
An engineering project has an investment amount of $127420 with an annual net profit of $53826 for 4 years. If the interest rate and average inflation rate are 15% and 6%, respectively, calculate the present worth of the entire period.
When an investment’s annual net cash inflows are equal every year, the investment’s payback period can be calculated as: (See your Chapter 25 notes, page 2) When an investment’s annual net cash inflows are equal every year, the investment’s payback period can be calculated as: (See your Chapter 25 notes, page 2) Initial cost of the investment minus the annual net cash inflow Average amount of the investment divided by the average annual net income Initial cost of the investment divided by the annual net cash inflow Present value of net cash inflow divided by the initial cost of the investment Future value of net cash inflow divided by the initial cost of the investment Present value of the net cash inflow minus the initial cost of the investment Annual net cash inflow minus the initial cost of the investment Average annual net income divided by the average amount of the investment
A project has estimated to cost $64,025. and provide annual net cash flows of $15,000 for 6 years. Determine the internal rate of return for this project.
Consider an EOY geometric gradient, which lasts for eight years, whose initialvalue at EOY one is $250,000 and f = 6% per year thereafter. Find the equivalentuniform gradient amount over the same period if the initial value of the cash flowsat the end of year one is $200,000. Answer the following questions to determinethe value of the gradient amount, G. The interest rate is 8% per year.

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