Problem 42IntroFacebook runs many data warehouses full of servers. Assume that each existingserver is 3 years old and was bought for $1,500. It could be sold for $600 now or for$300 in 2 years. The annual cost of running the server (for electricity, cooling andrepairs) is $240.A new server costs $1,400 today and could be sold for $175 in 5 years. The annualcost of running it is $140.Both types of servers are usable for 5 years and are linearly depreciated to zero over5 years.Facebook's marginal tax rate is 34% and the appropriate cost of capital for thisproject is 9%.Your task is to find out if Facebook should replace each server now or in two years.Part 1Attempt 1/5 for 10 pts.What is the present value of all cash flows if a new server is bought once right now?0+ decimalsSubmitPart 2Attempt 1/5 for 10 pts.What is the present value of all cash flows if the old server is sold now, and the newserver is bought now and then replaced every 5 years at the same terms?0+ decimalsSubmitPart 3Attempt 1/5 for 10 pts.What is the present value of all cash flows for the next 2 years if the old server iskept?0+ decimalsSubmitPart 4Attempt 1/5 for 10 pts.What is the present value of all cash flows if the server is first replaced in 2 years,and then every 5 years thereafter at the same terms?0+ decimalsSubmit

Present Value of Cash Flow:The future cash amount's current worth, at a given rate of return, is…

Answered: Part 1 Attempt 1/5 for 10 pts. What is…

Business

Finance

Part 1 Attempt 1/5 for 10 pts. What is the present value of all cash flows if a new server is bought once right now?

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

See similar textbooks

Related questions

Q: You are offered a chance to buy an asset for $4,000 that is expected to produce cash flows of $750…

A: The internal rate of return (IRR) is a financial metric used to estimate the potential profitability…

Q: Question content area top Part 1 (Present value of complex cash flows) You have an opportunity to…

A: The discount rate of zero percent means that the value of a dollar will remain the same in the…

Q: O Question 4 What is the future value of the following cash flow stream at a rate of 7.5%? Years:…

A: Solution:When an amount is invested somewhere, it earns interest on it.The amount initially invested…

Q: Consider the following cash flows: Year Cash Flow 0 1 2 3 33,000 13,900 17,800 11,300 Required: What…

A: Internal Rate of Return (IRR) is the discount rate at which the present value of cash inflow equals…

Q: What is the NPV of the following cash flows if the required rate of return is 0.09? Year 0…

A: Required rate of return = 0.09 Year Cash flow 0 -6816 1 3577 2 3505 3 2732 4 3757

Q: present value is the

A: https://docs.google.com/document/d/19Usy902_lK6tWQ3RgtQiUedGybbYnqlidq6sySnT8YI/edit

Q: Find the present values of the following cash flow streams at a 9% discount rate. Do not round…

A: The present value is the discounted value of future cash flows. It is computed by discounting the…

Q: value. If required, round to the nearest dollar. Branch Office Computer System ATM Kiosk Expansion…

A: Net present value (NPV) is the difference between the present value of cash inflows and the present…

Q: 1 2 The following cash flow pattern has two IRRs. Use Excel to draw a graph of the NPV of these cash…

A: Analyzing a Project with Two IRRs in ExcelThis project's cash flow pattern has two IRRs due to the…

Q: Consider the following cash flows: Year Cash Flow -$ 32,000 0 1 14, 200 2 17,500 3 11,600 a. What is…

A: Cash flow year 0 = CF0 = -$32,000Cash flow year 1 = CF1 = $14,200Cash flow year 2 = CF2 =…

Q: Year Cash Flow 0 −$ 9,300 1 5,700 2 3,000 3 4,800 a. What is the profitability index for the cash…

A: Profitablity index shows how much the project earns on each dollar.Profitability index = PV of all…

Q: What is the NPV of the following cash flows if the required rate of return is 0.06? Year 0 1 2 3 4…

A: Net present value (NPV) is the difference between present value of cash inflows and cash outflows…

Q: a. Find the present values of the following cash flow streams at an 8% discount rate. Do not round…

A: The PV of an investment refers to the combined value of the investment's cash flows assuming that…

Q: Ahmed has recently invested his money and s expecting the following cash fows the end respectfully.…

A: Given information : Year Cash flow 1 582 2 455 3 237 4 477 5 477 6 477 Discount…

Q: Consider the following cash flow diagram. What is the value of X if the internal rate of return is…

A: Internal Rate of Return (IRR) refers to that rate at which business determine its discount rates and…

Q: Year Cash Flow 0 −$8,200 1 2,500 2 4,100 3 3,900 What is…

A: Profitability index- It is an index that gives a measure of a project's attractiveness. It is…

Q: BASIC (Questions 1–22) 1. Calculating Payback What is the payback period for the following set ofr…

A: Year Cash flow 0 -7800 1 3100 2 3200 3 2200 4 1400

Q: me =0.1 What is the present value of the Tollowing streamI of cashT Iow ? Year 2 Year ... 1000…

Q: Eric wants to invest in government securities that promise to pay $1,000 at maturity. The…

A: 1) Present value (PV) is the current value of a future sum of money or stream of cash flows given a…

Q: Find the present values of the following cash flow streams at a 10% discount rate. Do not round…

A: Given,

Q: Assume r=0.1. What is the present value of the following stream of cash flow? Year 0 Year 1 Year 2…

A: Present value is the discounted value of future cash flows associated with the project. It is the…

Q: Year Cash Flow 1 $ 1,375 2 1,495 3 1,580 4 1,630 If…

A: The table is: Year Cash flow ($) 1 1375 2 1495 3 1580 4 1630

Q: For the following stream of free cash flows, calculate the npv if the discount rate is 12.5%

A: Net Present Value: It is the difference between the cash outflow and the discounted cash inflows.…

Q: Year Cash Flow 0123 $32,500 13,300 18,400 10,700 What is the IRR of the cash flows? (Do not ro your…

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: Question 23 What is the future value of the following cash flow stream at a rate of 8%? Do not round…

A: CF year 1 = CF1 = 1,350 CF year 2 = CF2 = 3,750CF year 3 = CF3 = 4,500CF year 4 = CF4 = 6,250Rate =…

Q: (Related to Checkpoint 6.5) (Present value of a growing perpetuity) What is the present value…

A: Year one cash flow = $2500 Growth rate = 0.02 Discount rate = 0.13 Discount rate = 0.11 Present…

Q: year cash flow 1 1375 2 1495 3 1580 4 1630 If the discount rate is 8 percent, what is the…

A: The Future Value of cashflow is computed by using the present value of cash flows, time period, and…

Q: Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a…

A: payback period = years before payback period + (cumulative cash flow in the year before recovery)/…

Q: Investment Perlod 1 2 3 4 5 $(1,000) $100 264 A $100 $100 $100 $1,100 в (1,000) 264 264 264 264…

A: “Hey, since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: Consider the following cash flows: Cash Flow Year 0 -$ 33,500 1 14,500 2 17,200 3 11,900 What is the…

A: Internal Rate of Return is the discount rate at which the present value of cash inflows equal the…

Q: What is the NPV of the following cash flows if the required rate of return is 0.13? Year 0 1 2 3 4…

A: NPV offers a clear indicator of an investment's anticipated profitability. An expected net present…

Q: (Present value of complex cash flows) How much do you have to deposit today so that beginning 11…

A: Cash flow year 11 - 15 = $15000 Cash flow year 16 = $45000 (i.e. $15000 + $30000) Interest rate =…

Q: What is the NPV of the following cash flows if the required rate of return is 0.09? Year 0…

A: Here, Year Cash Flows (CF) Discount rate 0 -4529.00 0.09 1 2431.00 0.09 2 572.00 0.09 3…

Q: a. Find the present values of the following cash flow streams at a 9% discount rate. Do not round…

A: Present value refers to the current value of the future expected ash flows discounted with given…

Q: LO 3 8. Calculating IRR What is the IRR of the following set of cash flows? Year Cash Flow $19,400 -…

A: Year Cash flow 0 -19400 1 10400 2 9320 3 6900

Q: Determine the rate of return for the cash flows show with two trials with 5% and 10% interest rates)…

A: Rate of return can be determined from interpolation or doing trial and error methods both are useful…

Q: Calculate the NPV of the following cash flows using a 10% discount rate? The first cashflow is…

A: NPV is also known as Net Present Value. It is a capital budgeting techniques which help in decision…

Q: a. Find the present values of the following cash flow streams at an 11% discount rate. Do not round…

A: Present Value can be calculated by following function in excel =NPV(rate,value1,[value2],…) +…

Q: As the discount rate increases, the present value of a future cash inflow Question 13 options:…

A: As the discount rate increases, the present value of a future cash inflow gets larger.

Q: What is the most you should pay to receive the following cash flows if your required rate of return…

A: The present value is the value that must be invested today. It considered the future value and the…

Q: interest compounded annually? O $2,200 i = 4% H $2,500 X 2 3 $3,500 a prese

A: Present value is the equivalent value today of the future cash flow based on the time value of money…

Q: What is the payback period for the following set of cash flows? Year 0 1 2 3 4 Cash Flow -$5,300…

A: Payback Period refers to the period within which the initial investment made on a project is…

Q: ash Flow $1,000 t Rate/Period 6% of Periods 5 Value using a Time Line 1 2 ws Value of Each Cash Flow

A: Present value refer to the concept of determining the value of money on current date is…

Q: Consider an investment where the cash flows are: - $920.33 at time 1-0 (negative since this is your…

A: Internal rate of return:Internal Rate of Return (IRR) is a financial metric that calculates the…

Q: Consider the following cash flows: Year Cash Flow 32,000 1 13,700 18,000 11,100 a. What is the NPV…

A: Net Present value is present value of cash flow minus initial investment

Question

Problem 42
Intro
Facebook runs many data warehouses full of servers. Assume that each existing
server is 3 years old and was bought for $1,500. It could be sold for $600 now or for
$300 in 2 years. The annual cost of running the server (for electricity, cooling and
repairs) is $240.
A new server costs $1,400 today and could be sold for $175 in 5 years. The annual
cost of running it is $140.
Both types of servers are usable for 5 years and are linearly depreciated to zero over
5 years.
Facebook's marginal tax rate is 34% and the appropriate cost of capital for this
project is 9%.
Your task is to find out if Facebook should replace each server now or in two years.
Part 1
Attempt 1/5 for 10 pts.
What is the present value of all cash flows if a new server is bought once right now?
0+ decimals
Submit
Part 2
Attempt 1/5 for 10 pts.
What is the present value of all cash flows if the old server is sold now, and the new
server is bought now and then replaced every 5 years at the same terms?
0+ decimals
Submit
Part 3
Attempt 1/5 for 10 pts.
What is the present value of all cash flows for the next 2 years if the old server is
kept?
0+ decimals
Submit
Part 4
Attempt 1/5 for 10 pts.
What is the present value of all cash flows if the server is first replaced in 2 years,
and then every 5 years thereafter at the same terms?
0+ decimals
Submit

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: About the query

VIEW

Step 2: Calculation of part 1 and part 2

VIEW

Step 3: Calculation of part 3 and part 4

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

What is the NPV of the following cash flows if the required rate of return is 0.09? Year 0 1 2 3 4 CF -3,935 687 1,937 3,189 968 Enter the answer with 2 decimals (e.g. 1000.23).
Find the present values of the following cash flow streams at a 3% discount rate. Do not round intermediate calculations. Round your answers to the nearest cent. 0 1 2 3 4 5 Stream A $0 $150 $400 $400 $400 $250 Stream B $0 $250 $400 $400 $400 $150
Consider the following cash flows: Year 0 1 2 Cash Flow -$ 32,500 13,800 17,900 11, 200 What is the IRR of the cash flows? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Internal rate of return %
Consider the following cash flows: Year Cash Flow 0 1 2 3 $19,400 10,400 9,320 6,900 What is the IRR of the above set of cash flows? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return 4 Prev
Consider the following cash flows: Year Cash Flow 0123 $19,400 10,400 9,320 6,900 What is the IRR of the above set of cash flows? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return 96
Damien offers you a sequence of end-of-year cash flows for an investment as follows: Year 1 2 3 4 4 What is the value of the cash flows if the opportunity cost is 6 percent? (Round to the nearest dollar). Please click on the following link to access a blank worksheet Click to open:: O $8.392 $8.598 Cash Flow $4,000 $3,000 $2,000 $1,000 $8.734 $8.915
Given the following cash flows and a discount rate of 9.5%, the net present value is closest to: $ CFO (27.50) 2$ $ $ CF1 8.75 CF2 11.30 CF3 14.90 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. $1.26 b $28.76
Uneven Cash Flow Stream Year Cash Stream A Cash Stream B 1 $100 $300 2 400 400 3 400 400 4 400 400 5 300 100 What is the value of each cash flow stream at a 0% interest rate? Round your answers to the nearest cent.Stream A $ _______Stream B $ _______
If you are compounding a cash flow, you are ________. A: Finding a future value B: Finding a present value C: Multiplying a future cash flow by the number of years it is from the present D: None of the abov
What is the present value of an investment with the following cash flows? Year 1 $14,000 Year 2 $20, 000 Year 3 $30,000 Year 4. $ 43,000 Year 5. $ 57,000 Use a 7% discount rate, and round your answer to the nearest $1. a. $128, 487 b. $107, 328 c. $112, 346 d. $ 153, 272
Project X cash flows is given on the timeline below 0. 2. 3 4. Project X -$10,000 $6.500 $3,000 $3.000 $1.000 Calculate Project X NPV if WACC-9% Round your answer to the nearest hundredth, have at least two decimal digits and write it in the Answer field. Would you accept or reject the project (write in the textbox below the answer field)?
a. Find the present values of the following cash flow streams at a 6% discount rate. Do not round intermediate calculations. Round your answers to the nearest cent. 1 3 4 Stream A $0 $150 $400 $400 $400 $300 Stream B $0 $300 $400 $400 $400 $150 Stream A: $ Stream B: $ b. What are the PVs of the streams at a 0% discount rate? Round your answers to the nearest dollar. Stream A: $ Stream B: $

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS