In l-year the number of units sold will be revised either upward by 8,700 or downward by4,300 with equal probability.The initial values are as follows:Net cash flow per unitS71No. of units sold5,700$1,680,000Initial investmentLife of projectDiscount rateScrape value in year-11015%$1,500,000Find the present value of option to abandon.(A) $18,798(B) $17,798(C) $18,978(D) $18,978

The present value of the abandonment option will depend upon the value of the cash flows in case the…

In l-year the number of units sold will be revised either upward by 8,700 or downward by 4,300 with equal probability. The initial values are as follows: Net cash flow per unit No. of units sold Initial investment Life of project Discount rate Scrape value in year-1 $71 5,700 S1,680,000 10 15% S1,500,000 Find the present value of option to abandon. (A) $18,798 (B) S17,798 (C) $18,978 (D) $18,978

In l-year the number of units sold will be revised either upward by 8,700 or downward by 4,300 with equal probability. The initial values are as follows: Net cash flow per unit No. of units sold Initial investment Life of project Discount rate Scrape value in year-1 $71 5,700 S1,680,000 10 15% S1,500,000 Find the present value of option to abandon. (A) $18,798 (B) S17,798 (C) $18,978 (D) $18,978

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 $350,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net cash flows are as follows: Year Net Cash Flow 1 $150,000 2 130,000 3 104,000 4 90,000 The minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively. Determine the net present value.$fill in the blank 1
H
Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project C Time: 1 3 4 Cash flow: -$1,900 $840 $750 $790 $480 $280 Discounted payback period years Should the project be accepted or rejected?
Find the Annual Equivalent Worth AEW for the indefinite project described by (jo» ND-), G, Nc-l»? Assume a MARR of 12% for the project. For the defender, the AEC are described below on the left side. For the challenger, the AEC are described on the right side. 5400 N=1 5100 5350 N=2 4900 5200 N=3 4800 5300 N=4 5300 5500 N=5 5900
Compute the discounted payback statistic for Project C if the appropriate cost of capital is 6 percent and the maximum allowable discounted payback period is three years. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Project C 0 1 2 3 Time: Cash flow: -$3,000 $1,280 $ 1,080 $ 1,120 Discounted payback period years Should the project be accepted or rejected? 4 $ 700 5 $ 500
year payback period criteria and a required return of 12 percent. |Year Cash flow |(OMR) -26,000 18,000 10,000 7,000 -15,000 9,000 2 3 4 11. What is the net present value for the project? 12. What is the payback period for the project? 13. What is the discounted payback period for the project? 14. What is the profitability index for the project? 15. Given your analysis, should the fim accept or reject the projeet?
Compute the discounted payback statistic for Project C if the appropriate cost of capital is 6 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project C Time: 0 1 2 3 4 5 Cash flow: −$2,800 $1,200 $1,020 $1,060 $660 $460 Should the project be accepted or rejected?multiple choice accepted rejected
1otal Investment in the Project ration : A project requires an investment of 7.20.000 and a scrap value of 20,000 after five years. It is expected to yield profits after depreciation & taxes during five years amounting to 65,000; 25.000: 80.000, 3 70,000 and 90,000. Calculate the average rate of return on the investment. tion:
Compute the payback statistic for Project A if the appropriate cost of capital is 9 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$2,100 $790 $810 $740 $520 $320 Payback: ? Years
Compute the discounted payback statistic for Project C if the appropriate cost of capital is 7 percent and the maximum allowable discounted payback period is three years. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Project C Time: 2 Cash flow: -$ 2,600 $ 1,120 $ 960 3 $ 1,000 4 5 $ 620 $ 420 Discounted payback period years Should the project be accepted or rejected? (Click to select)

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