Sakib is considering investing in new equipment. The cost of this equipment is $45,000 and it will have a five-year life. The estimated cash flows are..The firm currently has a return of 12% and this is considered to be its cost of capital. Calculate the NPV of the investment [Score 2] * year 1 8000 9000 12000 4 9500 9000 -$10994 +$19094 +$109944 -$19094 2. 3. 5.

Sakib is considering investing in new equipment. The cost of this equipment is $45,000 and it will have a five-year life. The estimated cash flows are..The firm currently has a return of 12% and this is considered to be its cost of capital. Calculate the NPV of the investment [Score 2] * year 1 8000 9000 12000 4 9500 9000 -$10994 +$19094 +$109944 -$19094 2. 3. 5.

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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Dry-Sand Company is considering investing in a new project. The project will need an initial investment of $3,000,000 and will generate $1,800,000 (after-tax) cash flows for three years. Calculate the MIRR (modified internal rate of return) for the project if the cost of capital is 13%. 18.62% 23.43% 26.91% 28.72%
1. What is the profitability index of a project that costs $90,000 and returns $30,000 annually for 8 years if the opportunity cost of capital is 9.6%? a.0.64 b.0.80 c.1.76 d.1.05 e.1.26 2. King Corporation is planning a 15-year project with an initial investment of $2,013,000. The project will have $563,000 cash inflows per year in years 1-2; $166,000 cash inflows in years 3-10, and $57,000 cash inflows in years 11-15. Determine the project's internal rate of return (IRR). Using financial calculator a.6.87% b.5.72% c.4.58% d.10.30% e.8.24%
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A project which cost you $150,000 to implement, promises toproduce the following cash-flows over its 5 years period:Year 1 : 40,000Year 2 : $30,000Year 3 : $20,000Year 4 : $50,000Year 5: $80,000If investors expect 15% p.a as their required rate of return, if thisproject is profitable to invest? What is the payback peirod for this project?
None
You are considering the investment of $111,000 (today) in a lemonade stand. Also, you expect the stand to generate the following future cash flows: • At the end of year 1: $0 • At the end of year 2: $0 • At the end of year 3: $0 • At the end of year 4: $178,000 What is the IRR (Internal Rate of Return) of this project? (Answer to the nearest 0.01%)
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