Gomez is considering a $235,000 investment with the following net cash flows. Gomez requires a 9% return on its investments. (PV of $1. EV of $1. PVA of $1. and EVA of $1) Note: Use appropriate factor(s) from the tables provided. Year 1 $67,000 Year 2 $51,000 Net cash flows (a) Compute the net present value of this investment. (b) Should Gomez accept the investment? Required A Required B Year 3 Year 4 $71,000 $160,000 Complete this question by entering your answers in the tabs below. Year 5 $52,000

Gomez is considering a $235,000 investment with the following net cash flows. Gomez requires a 9% return on its investments. (PV of $1. EV of $1. PVA of $1. and EVA of $1) Note: Use appropriate factor(s) from the tables provided. Year 1 $67,000 Year 2 $51,000 Net cash flows (a) Compute the net present value of this investment. (b) Should Gomez accept the investment? Required A Required B Year 3 Year 4 $71,000 $160,000 Complete this question by entering your answers in the tabs below. Year 5 $52,000

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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For the following levered total cash flow returns, what is the levered NPV, and should you pursue the investment if your levered discount rate is 14%? Year Total Cash Flow (Pre-Tax) $ 31,795; yes 31,795; no x-31,795; yes -31,795; no 0 (400,000) $ 1 30,000 $ 2 30,900 $ 3 4 31,827 $ 32,782 $ 5 533,765
s
Suppose an investor is interested in purchasing the following income producing property at a current market price of $ 1,490,000. The prospective buyer has estimated the expected cash flows over the next five years to be as follows: Year 1 = $88,000, Year 2 = $90,662, Year 3 = $91,923, Year 4 = $95,778, Year 5 = $97,000. Assuming that the required rate of return is 15% and the estimated proceeds from selling the property at the end of year five is $1,860,000, what is the NPV of the project? What is the IRR of the project?
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Regarding the proposed investments, XYZ INC. gathers the following data: a cash cost of 13,000, net annual cash flows of 45,000, and a present value factor of 5.40 rounded for cash inflows over a ten-year period. Find out all the relevant details that will be important when choosing an investment. Please let me know whether you think our firm should receive an investment based on the following information:
You are considering the following two projects and can take only one. Your cost of capital is 10.7%. The cash flows for the two projects are as follows ($ million) a. What is the IRR of each project? b. What is the NPV of each project at your cost of capital? c. At what cost of capital are you indifferent between the two projects? d. What should you do? a. What is the IRR of each project? The IRR for project A is %. (Round to one decimal place.) Data table D (Click on the following icon in order to copy its contents into a spreadsheet) Project A Year 0 -$100 B -$100 Year 1 $22 $49 Year 2 $31 $39 Print Done Year 3 Year 4 $39 $49 $31 $21 -
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