Pirelli is considering a software development project. It will require a $200,000 initial investment as well as subsequent investments of $50,000 at the end of years three and four. Pirelli expects inflows of $75,000 per year from year three thru nine. a. What is the project's total cash outflows total? b. What is year three's net inflow/outflow?
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- Project A requires an initial investment of $20,500, a cash inflow of $15,500 in the first year, and inflows of $10,000 each year for the next 2 years. What is the payback period for this project?. calculate the net present value of the following: Project A requires an initial investment of $1,000 and is expected to generate cash flows of $400 per year for 3 yearsUsing a time line The financial manager at Starbuck Industries is considering an investment that requires an initial outlay of $22,000 and is expected to produce cash inflows of $1,000 at the end of year 1, $7,000 at the end of years 2 and 3, $12,000 at the end of year 4, $8,000 at the end of year 5, and $7,000 at the end of year 6. a. Select the time line option that represents the cash flows associated with Starbuck Industries' proposed investment. b. Which of the approaches-future value or present value-do financial managers rely on most often for decision making? Why? a. Which of the following time lines correctly represents the cash flows associated with Starbuck Industries' proposed investment? (Select the best answer below.) OA. $22,000 - $1,000 $7,000 $7,000-$12,000 - $8,000 - $7,000 + 5 0 3 4 6 O B. $22,000 $1,000 $7,000 $7,000 $12,000 $8,000 $7,000 + + 2 5 0 O C. $7,000 0 1 0 1 $8,000 $12,000 $7,000 $7,000 $1,000 $22,000 + + 2 3 4 5 O D. - $22,000 $1,000 $7,000 $7,000 $12,000…
- A project is projected to cost $2,000,000 to undertake. It will generate positive cash inflows as follows: Year 1 - $400,000; Year 2 500,000; Year 3 - $650,000; ear 4 - 750,000; Year 5 - 800,000. What is the project's Profitability Index if the required return is 10% ?Use the NPV method to determine whether Kyler Products should invest in the following projects: Project A: Costs $280,000 and offers seven annual net cash inflows of $52,000. Kyler Products requires an annual return of 12% on investments of this nature. Project B: Costs $385,000 and offers 9 annual net cash inflows of $75,000. Kyler Products demands an annual return of 10% on investments of this nature. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.) Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A. Project A: Years 1-7 0 Present value of annuity Investment Net present value of Project A Calculate…There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $34,927 and is expected to generate the following cash flows: First Year Second Year Third Year Total Alpha Project $32,500 $22,500 $4,500 $59,500 Beta Project 7,000 23,500 27,904 58,404 A. Calculate the internal rate of return on both projects. Use the IRR spreadsheet function to calculate internal rate of return. Alpha Project fill in the blank % Beta Project fill in the blank % B. Make a recommendation on which one to accept.
- Consider the following three investment opportunities: Project I would require an immediate cash outlay of $50,000 and would result in cash savings of $18,000 each year for 4 years. Project II would require cash outlays of $8,000 per year and would provide a cash inflow of $35,000 at the end of 4 years. Project III would require a cash outlay of $34,000 now and would provide a cash inflow of $55,000 at the end of 4 years. PV factor for $1 annuity over 4 years at 12% is 3.037 and PV factor of $1 for 4 year at 12% is 0.636. The discount rate is 12%. 1. What is the NPV from Project-I. Show your work 2. What is the NPV from project-II. Show your work. 3. What is the NPV from Project-III. Show your work. 4. Which of the three project should be accepeted and which one(s) should not be accepeted? Why?Capstone Investments is considering a project that will produce cash inflows of $11,000 in 1 year, $22,000 in 2 years, and $33,000 in 3 years. The company assigns the project a discount rate of 6%? What is the present value of these cash inflows?Nikita Berhad is evaluating a project which expected to earn a series of cash inflows as shown in the table below. The initial investment of this project is RM52,300. If the required rate of return is 12 percent, determine whether this project is profitable or loss by calculating the net present value and profitability index techniques.
- The James Company is considering an investment with a cost today of $1,500,000 and which will produce the following net inflows: Year 1 600,000 Year 2 300,000 Year 3 200,000 Year 4 400,000 Year 5 500,000 What is the Payback Period for the investment?. calculate the net present value of the following: Project A requires an initial investment of $1,000 and is expected to generate cash flows of $400 per year for 3 yearsUse the NPV method to determine whether Stenback Products should invest in the following projects: Project A: Costs $260,000 and offers eight annual net cash inflows of $54,000. Stenback Products requires an annual return of 14% on investments of this nature. Project B: Costs $395,000 and offers 10 annual net cash inflows of $77,000. Stenback Products demands an annual return of 12% on investments of this nature. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.) Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A Net Cash Inflow Project A: Years 1-8 0 Present value of annuity Investment Net present value…