Star City is considering an investment in the community center that is expected to return the following cash flows. Use Exhibit A.8. Year Net Cash Flow 1 $ 38,000 2 68,000 3 98,000 4 98,000 5 118,000 This schedule includes all cash inflows from the project, which will also require an immediate $218,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 25 percent? Net present value b) b. What is the net present value of the project if the appropriate discount rate is 12 percent? What is the net present value of the project if the appropriate discount rate is 12 percent? (Round PV factor to 3 decimal places.)
Star City is considering an investment in the community center that is expected to return the following cash flows. Use Exhibit A.8. Year Net Cash Flow 1 $ 38,000 2 68,000 3 98,000 4 98,000 5 118,000 This schedule includes all cash inflows from the project, which will also require an immediate $218,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 25 percent? Net present value b) b. What is the net present value of the project if the appropriate discount rate is 12 percent? What is the net present value of the project if the appropriate discount rate is 12 percent? (Round PV factor to 3 decimal places.)
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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Exercise A-12 (Algo) Present Value of Cash Flows
Star City is considering an investment in the community center that is expected to return the following cash flows. Use Exhibit A.8.
| Year | Net Cash Flow | ||
| 1 | $ | 38,000 | |
| 2 | 68,000 | ||
| 3 | 98,000 | ||
| 4 | 98,000 | ||
| 5 | 118,000 | ||
This schedule includes all
Required:
a. What is the
|
- b) b. What is the net present value of the project if the appropriate discount rate is 12 percent?
What is the net present value of the project if the appropriate discount rate is 12 percent? (Round PV factor to 3 decimal places.)
|
|
|
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