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Economic consideration is being given for a proposal to build out a new business. All capital and operating costs are in thousands of dollars. Revenue is forecasted for six years and is also in thousands of dollars. Use a 15% minimum discount rate to evaluate the given proposal. Calculate the Net Present Value (NPV), Rate of Return (ROR), Growth Rate of Return (GROR), Present Value Ratio (PVR), and Benefit Cost Ratio (B/C Ratio). Please interpret all your findings. Finally, what time zero capital expense would give you exactly a 15% rate of return? Project Costs and Incomes are shown on the diagram in thousands of $ Year 0 1 2 400 0 Revenue Capital Costs Operating Costs BTCF 0 -400 -100 300 -200 -200 -200 3 550 0 -300 4 700 0 -400 5 850 0 -500 6 1,000 0 -600

Economic consideration is being given for a proposal to build out a new business. All capital and operating costs are in thousands of dollars. Revenue is forecasted for six years and is also in thousands of dollars. Use a 15% minimum discount rate to evaluate the given proposal. Calculate the Net Present Value (NPV), Rate of Return (ROR), Growth Rate of Return (GROR), Present Value Ratio (PVR), and Benefit Cost Ratio (B/C Ratio). Please interpret all your findings. Finally, what time zero capital expense would give you exactly a 15% rate of return? Project Costs and Incomes are shown on the diagram in thousands of $ Year 0 1 2 400 0 Revenue Capital Costs Operating Costs BTCF 0 -400 -100 300 -200 -200 -200 3 550 0 -300 4 700 0 -400 5 850 0 -500 6 1,000 0 -600

Essentials Of Investments
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
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Economic consideration is being given for a proposal to build out a new business. All capital and operating costs are in thousands of dollars. Revenue is forecasted for six years and is also in thousands of dollars. Use a 15% minimum discount rate to evaluate the given proposal. Calculate the Net Present Value (NPV), Rate of Return (ROR), Growth Rate of Return (GROR), Present Value Ratio (PVR), and Benefit Cost Ratio (B/C Ratio). Please interpret all your findings. Finally, what time zero capital expense would give you exactly a 15% rate of return? Project Costs and Incomes are shown on the diagram in thousands of $ Year 0 1 2 0 400 0 -200 Revenue Capital Costs Operating Costs BTCF -400 -100 300 -200 -200 3 550 0 -300 700 0 -400 5 850 0 -500 1,000 0 -600
Transcribed Image Text:Economic consideration is being given for a proposal to build out a new business. All capital and operating costs are in thousands of dollars. Revenue is forecasted for six years and is also in thousands of dollars. Use a 15% minimum discount rate to evaluate the given proposal. Calculate the Net Present Value (NPV), Rate of Return (ROR), Growth Rate of Return (GROR), Present Value Ratio (PVR), and Benefit Cost Ratio (B/C Ratio). Please interpret all your findings. Finally, what time zero capital expense would give you exactly a 15% rate of return? Project Costs and Incomes are shown on the diagram in thousands of $ Year 0 1 2 0 400 0 -200 Revenue Capital Costs Operating Costs BTCF -400 -100 300 -200 -200 3 550 0 -300 700 0 -400 5 850 0 -500 1,000 0 -600
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The process through which any project's profitability is analyzed and evaluated is recognized as capital budgeting. There are multiple tools employed to determine and decide whether to infuse funds into a project or not. The net present value method, rate of return method, and benefit-cost ratio are some of them. The excess of cash flow's current worth over the initial investment indicates an investment's NPV.

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