Cash of $12,000 will be receivedin year 6. Assuming anopportunity cost of capital of7.2%, which of the following istrue?А.The future value is $18,212В.The present value is $7,996С.The present value is $7,907D.Provide data for tax purposes

Future value is the amount of to be received or paid in future by taking into account the…

Answered: Cash of $12,000 will be received in…

Cash of $12,000 will be received in year 6. Assuming an opportunity cost of capital of 7.2%, which of the following is true?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Determine the IRR of the project and the NPV of the project at a cost of capital of 12% using the…

A: Net present value and IRR are the capital budgeting techniques where NPV computes the present value…

Q: ,what is the NPV of this investment?

A: Net Present Value: It is a measure of profitability and shows the absolute profit or loss made from…

Q: A capital investment has an initial cost of $523,000. At the end of each of the next 9 years, it is…

A: The fluctuation between the estimated value of inflows and outflows of money over time is known as…

Q: (a) Consider a 2-year project requiring a cash injection of $200 immediately and $230 after 1 year…

A: The graph of the NPV versus the required rate of return for the project is shown below-

Q: The initial cost of an investment is $65,000 and the discount rate (cost of capital) is 12%. The…

A: Initial Cost = i = $65,000Discount Rate = r = 12%Cash Flow per Year = c = $16,000Time = t = 8 Years

Q: You and a coworker are analyzing two proposed capital investments with the following cash flows:…

A: The objective of this question is to calculate the profitability index (PI) for two proposed capital…

Q: Consider the following projected cash flows in the indicated cells in Excel for years zero through…

A: We know, Net Present Value (NPV) is the difference between the present value of cash inflows and…

Q: Given the following information, calculate the net present value: Initial outlay is $50,000;…

A: The NPV of a project refers to the measure of the profitability of the project as it discounts the…

Q: 3500 2 3000 3 3100 4 2800

A: to all discounted cash inflows after the year of investment. By using the excel it can be easily…

Q: ssume that the amount of initial investment is $350,000 and the scheduled receipts are $250,000 in…

A: Net Present Value is the difference between the present value of cash inflows and cash outflows.

Q: What's the FUTURE value of the following cash flows, at 6%/period: 0,200,400,600,800,1000

A: The objective of the question is to calculate the future value of a series of cash flows at a given…

Q: Consider the following capital investment proposal: It requires an initial investment of $1 billion.…

A: IRR is a popular capital budgeting metric.IRR is the rate at which NPV (i.e. net present value) is…

Q: FCF IS $800 in year 1 and $850 in year 2. Cash flows are expected to be earned at the end of each…

A: The present value is the present worth of the amount that will be paid or received at future.

Q: 4. Consider an iìnvestment of $100,000 that yields $20,000 after year 1, $30,000 after year 2,…

A: To calculate the payback period, we need to find the time that the project has recovered its initial…

Q: Illustration: An investment opportunity costs $10,000 and returns $5,000, $4,000, and $3,000,…

Q: The Ham Company is analyzing new capital investments. Projects X Y and Z. Each project has a cost of…

A: Capital budgeting is the process by which a company makes decisions about investments in long-term…

Q: Estimated cash inflows for project A are as follows , respectively ; $ 10.000 , 7.000…

A: Profitability index method does not consider lives of the project. Profitability index method…

Q: A project requires a $100,000 investment and is expected to generate the following cash flows in the…

A: Step 1: Given Value for Calculation Initial Investment = i = $100,000Cash Flow for Year 1 = cf1 =…

Q: An investment of $70,000 yields a net annual income of $15,000 for 6 years. What is the internal…

Q: Assume that Anonas Company is planning to invest P4M in a new project which will provide net cash…

A: IRR or internal rate of return is a concept in capital budgeting. It is used to evaluate long term…

Q: 6. Consider the following cash flow series, Aj=1,500 Az=3,000 A3=4,500 A4=6,000 As=7,500 A6-9,000…

A: A1 = 1500, A2 = 3000, A3 = 4500, A4 = 6000 A5 = 7500, A6 = 9000, A7 = 10500 A8 = 12000, A9 = 13500,…

Q: comma 900 in one year. If your cost of capital is 7.6 %, what is the NPV of this investment?

A: The net present value calculation aids in determining whether an investment will yield a higher…

Q: If a capital investment is $28,048 and equal annual cash inflows are 62,605.3, state the internal…

A: Solution: Internal rate of return factor is arrived at by dividing capital investment by annual cash…

Q: ompute NPV using excel. Discount rate - 10%

A: Net present value or NPV is excess of present value of cash inflows over present value of cash…

Q: pute the MIRR statistic for Project I if the appropriate cost of capital is 12 percent. (Do not…

A: In this question, we will find out the MIRR (Modified internal rate of return) here we will find out…

Q: Project A has an initial cost of $55,000 expected net cash inflows of $35,000 per year for 3 years,…

A: The payback period refers to the amount of time it takes to recover the cost of an investment.…

Q: Olive Company is considering a project that is estimated to cost $279,000 and provide annual net…

A: The internal rate of return is the sum of money a project makes in a certain time period to cover…

Q: You have an opportunity to invest $ 108 000 now in return for $ 79500 in one year and $ 30 comma 300…

A: The objective of this question is to calculate the Net Present Value (NPV) of an investment…

Q: You have an opportunity to invest $106,000 now in return for $79,300 in one year and $29,100 in…

A: Data given: Initial Investment ($) = 106,000 Cash flow(Year 1) = $ 79300 Cash flow (Year 2) = $…

Q: Investment A is expected to generate after-tax cash flows of $5,000 per year for 6 years and will…

A: Cross-over rate is the discount rate at which the Net present value (NPV) of two projects is…

Q: Perez Company is considering an investment of $21,530 that provides net cash flows of $6,500…

A: Internal Rate of Return (IRR):

Q: You are considering a project X which has cash flows given below:…

A: The question is based on the concept of investment appraisal and its techniques. The decision of…

Q: If the cost of capital is 18 percent and an investment costs $51,000, should you make this…

A: Cost of capital is 18% Initial cost is $51,000 Cash flow years 1-3 is $8,000 Cash flow Year 4-6 is…

Q: Suppose we are considering a capital investment that costs $686,400 and provides annual operating…

A: Net Present value (NPV) is defined as the present value of future cash flows less initial…

Q: project has cash flows of –$148,000, $43,000, $87,000, and $51,500 for Years 0 to 3, respectively.…

A: IRR is the rate at which Present value of cash Inflows is equal to Present Value of cash Inflows.…

Q: Cash flows from a new project are expected to be $5,000, $8,000, $14,000, $22,000, $24,000, and…

A: IRR stands for Internal Rate of Return, which is a financial metric used to calculate the potential…

Q: (a) Evaluate the projects using each of the following criteria, stating which project(s) DEVCON…

A: Payback Period: It is the period in which the project returns its initial cost. Hence, the lower…

Q: Nick is considering a capital investment that costs $525,000 and will provide the following net cash…

Q: Judson's cost of capital is 12%, what is the project's NPV? Year Cash Flow in $ 0 ($1000) 1…

A: Net Present Value (NPV) is the sum of the present value of all the cash inflows and outflows.Please…

Q: Find the net present value (NPV) for the following series of future cash flows, assuming the…

A: NPV is the method under which cash inflows that are received during the lifetime of a project are…

Q: An investment of $158397 is expected to generate an after-tax cash flow of $94000 in one year and…

A: CF0 = -$158397CF1 = $94000CF2 = $129000

Q: What is the minimum cash flow that could be received at the end of year 3 to make the following…

A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Cash of $12,000 will be received
in year 6. Assuming an
opportunity cost of capital of
7.2%, which of the following is
true?
А.
The future value is $18,212
В.
The present value is $7,996
С.
The present value is $7,907
D.
Provide data for tax purposes

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

You have an opportunity to invest $ 108 000 now in return for $ 79500 in one year and $ 30 comma 300 in two years. If your cost of capital is 8.5 %, what is the NPV of this investment? The NPV will be $
) Assuming a 9% cost of capital, find the modified internal rate of return for the following cash flows: a. 19.78% b. 6.95% c. 13.64% d. 7.86% Year Cash Flow 0 1 2 3 -$175 $167 $240 -$120
What is the present worth (P) of all the cash flows if F=16000, n=6 years, and i= 8% per year? Select one: O a. $16,480.00 b. $103,824.00 O c. $10,082.71 O d. $34,608.00
For a project that has a net investment of $1,500,000 and net cash flows of $400,000 for 5 years; Is the internal rate of return between (15% and 12%) or (10% and 12%). Explain your answer
Bloombish Corp. Inc. is considering a project that has cash flows of -$152,000, $60,800, $61,300, and $75,000 for Years 0 to 3 respectively. The required rate of return is 14 percent. Based on the internal rate of return ________ percent, you should ___________ the project. Select one: A. 12.95 percent; accept B. 14.67 percent; accept C. 13.67 percent; reject D. 14.67 percent; reject
Here are cash flows for a project under consideration. C(0)= -$8160, C(1)=6180, and C(2)=20280. What is the IRR of the project?
3. If a capital investment is $28,752.7 and equal annual cash inflows are 69,943.5, state the internal rate of return factor rounded to two decimal places.
A project has an initial capital outlay of Kshs.150,000 and unequal net cash-flows of Kshs 100,0000 in year one, Kshs 80,000 in year two, Kshs 70,000 in year three, Kshs 60,000 in year four, Kshs 50,000 in year five and a Kshs. 30,000 residual values at the end of its life in year six. REQUIRED i. Calculate the Accounting Rate of Return ii. Calculate the Internal Rate of Return iii. From your studies, what is the importance of Internal Rate of Return?
Decision D6, which has three possible choices (X, Y, or Z), must be made in year 3 of a 6-year study period in order to maximize E(PW). Using an MARR of 18% per year, the investment required in year 3, and the estimated cash flows for years 4 through 6, determine which decision should be made in year 3. D6 X Y Z High (X) Low (X) High (Y) Low (Y) High High (Z) Low (Z) Low High Low High Investment, Cash Flow, (Year Cash Flow, $1000 Year 3 3) (Year 4) 3 4 $-260,000 $50 $40 $30 $30 $190 $-30 Low $-52,000 $-250,000 The present worth of X is $ The present worth of Y is $ The present worth of Z is $ Select decision branch Y Cash Flow, $1000 (Year 5) 5 $50 $30 $40 $30 $170 $-30 Cash Flow, $1000 (Year 6) 6 $50 $20 $50 $30 $150 $-30 Outcome Probability 0.72 0.28 0.45 0.55 0.7 0.3
Project A would cost $44,383.00 today and have the following other expected cash flows: $27,842.00 in 1 year, $18,921.00 in 2 years, $4,722.00 in 3 years, and $3,185.00 in 4 years. The cost of capital for project A is 11.88 percent. Project B would cost $97,631.00 today and have the following other expected cash flows: $55,937.00 in 1 year, $24,612.00 in 2 years, $27,364.00 in 3 years, and $2,415.00 in 4 years. The cost of capital for project B is 7.73 percent Statement 1: Project A would be accepted based on the project's internal rate of return (IRR) and the IRR rule Statement 2: Project B would be accepted based on the project's payback period and the payback rule if the payback threshold is 2.90 years Statement 1 is true and statement 2 is true Statement 1 is true and statement 2 is false Statement 1 is false and statement 2 is true Statement 1 is false and statement 2 is false
What is the profitability index of a project that costs $8,000 and provides cash flows of $2,900 in years 1 and 2 and $4,900 in years 3 and 4? The discount rate is 8%. Note: Do not round intermediate calculations. Round your answer to 4 decimal places. Profitability index
You have an opportunity to invest $104,000 now in return for $79,100 in one year and $30,100 in two years. If your cost of capital is 9.3%, what is the NPV of this investment?