Investment Option "South" This potential investment is less risky and shorter term, so it has a minimum rate of return of 8.00%. This investment would require an initial outlay of cash of $169,000, and at the end of the 4-year life of this investment GEC Corporation is expected to have to pay a wind- down cost of $16,900. For the first 3 years of this investment, net annual cash inflows are expected to be $41,000 and for the last year of the investment, the net annual cash inflow is expected to be $102,500. 6. How much is the present value of the purchase of equipment? 7. How much is the present value of the wind-down cost? 8. How much is the present value of the annual cash inflows for the first 3 years? 9. How much is the present value of the annual cash inflow for the final year of this investment? 10. How much is the Net Present Value? 11. What is the Internal Rate of Return? (round to the nearest hundredths place/input code: $ $ %
Investment Option "South" This potential investment is less risky and shorter term, so it has a minimum rate of return of 8.00%. This investment would require an initial outlay of cash of $169,000, and at the end of the 4-year life of this investment GEC Corporation is expected to have to pay a wind- down cost of $16,900. For the first 3 years of this investment, net annual cash inflows are expected to be $41,000 and for the last year of the investment, the net annual cash inflow is expected to be $102,500. 6. How much is the present value of the purchase of equipment? 7. How much is the present value of the wind-down cost? 8. How much is the present value of the annual cash inflows for the first 3 years? 9. How much is the present value of the annual cash inflow for the final year of this investment? 10. How much is the Net Present Value? 11. What is the Internal Rate of Return? (round to the nearest hundredths place/input code: $ $ %
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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Transcribed Image Text:Investment Option "South"
This potential investment is less risky and shorter term, so it has a
minimum rate of return of 8.00%. This investment would require an
initial outlay of cash of $169,000, and at the end of the 4-year life of
this investment GEC Corporation is expected to have to pay a wind-
down cost of $16,900. For the first 3 years of this investment, net
annual cash inflows are expected to be $41,000 and for the last year of
the investment, the net annual cash inflow is expected to be $102,500.
6. How much is the
present value of the
purchase of
equipment?
7. How much is the
present value of the
wind-down cost?
8. How much is the
present value of the
annual cash inflows
for the first 3 years?
9. How much is the
present value of the
annual cash inflow
for the final year of
this investment?
10. How much is the
Net Present Value?
11. What is the
Internal Rate of
Return? (round to
the nearest
hundredths
place/input code:
اممم
$
$
$
%
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