Suppose we are considering a capital investment that costs $686,400 and provides annual operating cash flows of $165,000 for five years and teminal cash flow of $206,000 at the end of the fifth year. The project's opportunity cost of capital is 11%. Calculating the followings: (1) Net present value; (2) Profitability index; (3) Internal rate of retum (try 15% first).
Suppose we are considering a capital investment that costs $686,400 and provides annual operating cash flows of $165,000 for five years and teminal cash flow of $206,000 at the end of the fifth year. The project's opportunity cost of capital is 11%. Calculating the followings: (1) Net present value; (2) Profitability index; (3) Internal rate of retum (try 15% first).
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 1P: A project has an initial cost of 40,000, expected net cash inflows of 9,000 per year for 7 years,...
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![Suppose we are considering a capital investment that costs $686,400 and provides
annual operating cash flows of $165,000 for five years and teminal cash flow of
$206,000 at the end of the fifth year. The project's opportunity cost of capital is 11%.
Calculating the followings:
(1) Net present value;
(2) Profitability index;
(3) Internal rate of retum (try 15% first).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F11d62d9d-446b-48aa-9fae-d3ec19839979%2F8aa27700-5954-457f-9edd-8ef8c86230ab%2Fjrzedor_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose we are considering a capital investment that costs $686,400 and provides
annual operating cash flows of $165,000 for five years and teminal cash flow of
$206,000 at the end of the fifth year. The project's opportunity cost of capital is 11%.
Calculating the followings:
(1) Net present value;
(2) Profitability index;
(3) Internal rate of retum (try 15% first).
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