Chaquille's K-House, Inc. made an investment in a project with an initial cost of $11,064,450. This investment was for 8 years and had no residual value. The company expects to receive yearly net cash inflows of $2,603,400. Management is requiring a return of 12% on the investment. (Round your answers to two decimal places when needed and use rounded answers for all future calculations).
Chaquille's K-House, Inc. made an investment in a project with an initial cost of $11,064,450. This investment was for 8 years and had no residual value. The company expects to receive yearly net cash inflows of $2,603,400. Management is requiring a return of 12% on the investment. (Round your answers to two decimal places when needed and use rounded answers for all future calculations).
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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Question
Chaquille's K-House, Inc. made an investment in a project with an initial cost of $11,064,450. This investment was for 8 years and had no residual value. The company expects to receive yearly net
(Round your answers to two decimal places when needed and use rounded answers for all future calculations).
![1. What is the IRR for the project? Is this a good investment?
Inital Investment / Annual Net Cash Flow = Annuity PV Factor
Present value factor of an annuity of $1
-n
1 − (1 + r) ¯”
Annuity Factor
12% 8
Rate Periods Annuity Factor
14% 8
16% 8
17% 8
1
r
Initial Investment
NPV of the Project
III
11
2. Use the rate closest to the calculated Annuity PV factor that creates a positive NPV.
, where r = rate, and n = # of periods.
I
Chaquille's K-House, Inc. Net Cash Inflow Annuity PV Factor Present Value
PV of annuity](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F400ee257-b29d-4b7a-84f0-db1642c912e7%2Fdd4ad955-6c3b-422f-aea3-a7f6b265853c%2Fnsrso2l_processed.png&w=3840&q=75)
Transcribed Image Text:1. What is the IRR for the project? Is this a good investment?
Inital Investment / Annual Net Cash Flow = Annuity PV Factor
Present value factor of an annuity of $1
-n
1 − (1 + r) ¯”
Annuity Factor
12% 8
Rate Periods Annuity Factor
14% 8
16% 8
17% 8
1
r
Initial Investment
NPV of the Project
III
11
2. Use the rate closest to the calculated Annuity PV factor that creates a positive NPV.
, where r = rate, and n = # of periods.
I
Chaquille's K-House, Inc. Net Cash Inflow Annuity PV Factor Present Value
PV of annuity
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