calculate the minimum payback period - calculate the NVP of the projected cash flow - calculate the internal rate of return (IRR) Project Description and Details Project Cost (Initial Investment) First Year Cash Flow Annual Growth Rate (5 years) Expenses as a percentage of Revenues Payback Period NPV IRR This company is based in Massachusetts and distributes their flavored seltzers nationally. While they have a large, loyal customer following, the company has exchanged hands multiple times. The current owners want out of the business, but it is uncertain as to why this is the case. The company is undervalued and the sale price reflects this. $15,000,000 $8,500,250 3.25% 54% Year 0 Cash Flow Year 1 Cash Flow Year 2 Cash Flow Year 3 Cash Flow Year 4 Cash Flow Year 5 Cash Flow Projected Revenues at annual growth rate Projected Expenses at 54% of Revenue Annual Cash Flows Discount rate for each year (6%) Present value of cash flows The company assumes a discount rate of 6% for this project and wants the shortest payback possible period while maximizing profits.
calculate the minimum payback period - calculate the NVP of the projected cash flow - calculate the internal rate of return (IRR) Project Description and Details Project Cost (Initial Investment) First Year Cash Flow Annual Growth Rate (5 years) Expenses as a percentage of Revenues Payback Period NPV IRR This company is based in Massachusetts and distributes their flavored seltzers nationally. While they have a large, loyal customer following, the company has exchanged hands multiple times. The current owners want out of the business, but it is uncertain as to why this is the case. The company is undervalued and the sale price reflects this. $15,000,000 $8,500,250 3.25% 54% Year 0 Cash Flow Year 1 Cash Flow Year 2 Cash Flow Year 3 Cash Flow Year 4 Cash Flow Year 5 Cash Flow Projected Revenues at annual growth rate Projected Expenses at 54% of Revenue Annual Cash Flows Discount rate for each year (6%) Present value of cash flows The company assumes a discount rate of 6% for this project and wants the shortest payback possible period while maximizing profits.
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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- calculate the minimum payback period
- calculate the NVP of the projected cash flow
- calculate the
| Project Description and Details | Project Cost (Initial Investment) | First Year Cash Flow | Annual Growth Rate (5 years) | Expenses as a percentage of Revenues | Payback Period | NPV | IRR |
| This company is based in Massachusetts and distributes their flavored seltzers nationally. While they have a large, loyal customer following, the company has exchanged hands multiple times. The current owners want out of the business, but it is uncertain as to why this is the case. The company is undervalued and the sale price reflects this. | $15,000,000 | $8,500,250 | 3.25% | 54% |
| Year 0 Cash Flow | Year 1 Cash Flow | Year 2 Cash Flow | Year 3 Cash Flow | Year 4 Cash Flow | Year 5 Cash Flow | |
| Projected Revenues at annual growth rate | ||||||
| Projected Expenses at 54% of Revenue | ||||||
| Annual Cash Flows | ||||||
| Discount rate for each year (6%) | ||||||
| Present value of cash flows |
The company assumes a discount rate of 6% for this project and wants the shortest payback possible period while maximizing profits.
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