Market Fresh Foods is evaluating a new project to determine whether it warrants funding consideration. Having just taken over managing the project initiation process for Market Fresh from the previous project controller, Ray Bones is trying to evaluate the project's potential given its projected cash flows. As a first step, Ray developed the table of investment and revenue estimates below that he plans to use to determine the project's net present value. Market Fresh's CFO has indicated that, based on assumptions about risk during the course of the project, Ray should initially use 0.15 as a discount rate, but use 0.14 beginning in year 6. Assume all cash flows occur at the end of the specified year and calculate all values to three decimal places. if the problem has table data, copy the following lines and paste into the appropriate spot in the text section \footnotesize \baselineskip = 12pt \begin{tabular}{c | c} Investment & Revenue \\ \hline 12.4 & 0 \\ 15.8 & 0 \\ 17.5 & 0 \\ 20 & 0 \\ 15 & 17 \\ 0 & 22.9 \\ 0 & 18.6 \\ 0 & 19.9 \\ 0 & 31.4 \\ \end{tabular} Investment Reveune 12.4 0 15.8 0 17.5 0 20 0 15 17 0 22.9 0 18.6 0 19.9 0 31.4 Discounted Investment in year 5: Discounted Revenue in year 3: Cash Flow in year 5: NPV: Total Investment: Negative Cash Flow Years:
Market Fresh Foods is evaluating a new project to determine whether it warrants funding consideration. Having just taken over managing the project initiation process for Market Fresh from the previous project controller, Ray Bones is trying to evaluate the project's potential given its projected cash flows. As a first step, Ray developed the table of investment and revenue estimates below that he plans to use to determine the project's
Market Fresh's CFO has indicated that, based on assumptions about risk during the course of the project, Ray should initially use 0.15 as a discount rate, but use 0.14 beginning in year 6.
Assume all cash flows occur at the end of the specified year and calculate all values to three decimal places.
if the problem has table data, copy the following lines and paste into the appropriate spot in the text section
\footnotesize \baselineskip = 12pt
\begin{tabular}{c | c}
Investment & Revenue \\ \hline
12.4 & 0 \\ 15.8 & 0 \\ 17.5 & 0 \\ 20 & 0 \\ 15 & 17 \\ 0 & 22.9 \\ 0 & 18.6 \\ 0 & 19.9 \\ 0 & 31.4 \\
\end{tabular}
| Investment | Reveune |
| 12.4 | 0 |
| 15.8 | 0 |
| 17.5 | 0 |
| 20 | 0 |
| 15 | 17 |
| 0 | 22.9 |
| 0 | 18.6 |
| 0 | 19.9 |
| 0 | 31.4 |
Discounted Investment in year 5:
Discounted Revenue in year 3:
Cash Flow in year 5:
NPV:
Total Investment:
Negative Cash Flow Years:
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 4 images
