Grayson Company is considering a purchase of equipment that costs $63,000 and is expected to offer annual cash inflows of $17,000. Grayson's minimum required rate of return is 10%. How many years must the cash flows last for the investment to be acceptable? (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Do not round your intermediate calculations. Round to the nearest whole year. Multiple Choice 5 years 6 years

Grayson Company is considering a purchase of equipment that costs $63,000 and is expected to offer annual cash inflows of $17,000. Grayson's minimum required rate of return is 10%. How many years must the cash flows last for the investment to be acceptable? (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Do not round your intermediate calculations. Round to the nearest whole year. Multiple Choice 5 years 6 years

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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A project that costs $2,300 to install will provide annual cash flows of $730 for each of the next 5 years. a. Calculate the NPV if the opportunity cost of capital is 12%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV b. Is this project worth pursuing? Yes O No c. What is the project's internal rate of return IRR? (Do not round intermediate calculations. Round your answer to 2 decimal places.) %24
Incognito Company is contemplating the purchase of a machine that provides it with cash savings of $93,000 per year for five years. Interest is 11%. Assume the cash savings.occur at the end of each year. Required: Calculate the present value of the cash savings. Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Present value
Pendleton Products has a project requiring an initial cash investment of $3,100. The project is expected to return $1,000 each period for the next 5 periods, and it has a discount rate of 4%.1. Determine how long it will take, if at all, for the project to have a positive payback.Present value formula:
Your answer is partially correct. Sunland Company is considering a long-term investment project called ZIP. ZIP will require an investment of $123,600. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $82,400, and annual cash outflows would increase by $41,200. The company's required rate of return is 12%. Click here to view the factor table. Calculate the internal rate of return on this project. (Round answers to whole number (e.g., 15%).) Internal rate of return on this project is between 3 % and 1539 % Determine whether this project should be accepted? The project should be accepted.
PLEASE USE EXCEL, SHOW FORMULAS, AND INCLUDESPiderplot HiTek Manufacturing is purchasing a large tract of land for a new facility. Its loan is for $3 million, but this may vary by plus or minus 10%. The loan will be paid off in 15 years using annual payments, but this could be as low as 10 years or as high as 30 years. If the interest rate is 10% (between 8% and 12%), How much is each payment? Construct a spiderplot. Which change would be most significant?
You are evaluating a project that costs $69,000 today. The project has an inflow of $148,000 in one year and an outflow of $59,000 in two years. What are the IRRs for the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) What discount rate results in the maximum NPV for this project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Pendleton Products has a project requiring an initial cash investment of $3,100. The project is expected to return $1,000 each period for the next 5 periods, and it has a discount rate of 4%.1. Determine how long it will take, if at all, for the project to have a positive payback.Present value formula:
Compute the traditional payback period (PB) for a project that costs $30,000 if it is expected to generate $10,000 per year for six years? Round your answer to the nearest whole number. years If the firm's required rate of return is 12 percent, what is the project's discounted payback period (DPB)? Do not round intermediate calculations. Round your answer to two decimal places. years Should the project be purchased? The project -Select- be purchased.

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