Answered: Company Rapid Growth is considering the…

Company Rapid Growth is considering the following project: Year 0 1 2 3 4 5 Cash Flows -$88800 $10500 $25800 $33200 $37600 $50800 What's the payback period

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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Darius Inc. is considering a project that has the following cash flow data. Given WACC = 10%, what is the project's NPV? Year 0 = $-100,000 Year 1 = $45,000 Year 2 = $10,000 Year 3 = $0 Year 4 = $50,000 Year 5 = $15,000 Question 2Answer a. $0 b. $2,321.10 c. $1.20 d. $-7,361.95 e. $-1,230.18 f. $-524.23
Use the information below to answer Question#40: GIVEN: The XYZ Company is considering the following project with its corresponding financial data. The Company requires a 9% return from its investments. $ 500,000 $ 200,000 $ 225,000 $ 245,000 Initial investment: Expected Cash in-flow Year 1: Expected Cash in-flow Year 2: Expected Cash in-flow Year 3: Present Value Factor of 1 at 9%: n=1: 0.91743 n=2: 0.84168 n=3: 0.77218 40) Choose from one of the following that accurately depicts this decision: A) This investment should not be considered because NPV is a negative $62,048 B) This învestment should be considered because NPV equals positive $62,048 C) This investment should be considered because the IRR for this investment is obviously less than its Required Rate of Return D) B and Care both correct
A company is considering a project that has the following cash flow data. What is the project's payback? * Year 1 2 3 Cash flowS -$750 $300 $325 $350
Q4 Two new projects are proposed to a company. The Project A will cost $200,000 to develop and is expected to have annual cash flow of $90.000. The Project B will cost $ 250,000 to develop and is expected to have annual cash flow of $100,000. The company is very concerned about their cash flow. Using the NPV and Payback period, which project is better from a cashflow standpoint? r=10y.
A project has the following cash flow n 0 1 2 3 Cash flow -25,000 0 X X What is the value of X that will result in 15% rate of return?
What is the net present value of a capital investment project that has the followingaftertax cash flows for a company that requires a 15% rate of return on the project?Time Cash Flow0 -$4,0001 5002 2,0003 5,000
Assume a project has the following expected cash flows: What is the payback period? Year 0 1 2 3 4 Expected Net Cash Flow ($400,000) 100,000 150,000 200,000 250,000
Consider the investment project with the following net cash flows: What would be the value of X if the project's IRR is 25%?
Taggart Inc. is considering a project that has the following cash flow data. What is the project's payback in years? Year 0 1 2 3 Cash flows -$1,175 $460 $460 $460 Please explain and provide calculations.
Barry Inc. is considering a project that has the following cash flow and WACC data. What is the project's MIRR?WACC = 12.85% Year 0 1 2 3 4 5 CFs -$35,600 10,100 20,200 30,300 40,400 50,500 `
Suppose you are evaluating a project with the expected future cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. Year Cash Flow Year 1 $375,000 Year 2 $450,000 Year 3 $475,000 Year 4 $425,000 If the project’s weighted average cost of capital (WACC) is 10%, the project’s NPV (rounded to the nearest dollar) is: $267,719 $312,338 $297,465 $282,592 Which of the following statements indicate a disadvantage of using the regular payback period (not the discounted payback period) for capital budgeting decisions? Check all that apply. The payback period does not take the time value of money into account. The payback period does not take the project’s entire life into account. The payback period is calculated using net income…
Consider another set of net cash flows: Year Cash flow 0 1,000 1 1,000 2 0 3 1,500 4 2,000 5 3,500 What is the net present value of the stream if the opportunity cost of capital is 10 percent? a. What is the value of the stream at the end of year 5 if the cash flows are invested in an account that pays 10 percent annually? 2. What cash flows today (time 0), in lieu of the 1,000 cash flow, would be needed to accumulate $10,000 at the end of year 5? (Assume that the cash flows for years 1 through 5 remain the same.)

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