Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects ofthis risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5years, respectively.Time:135Cash flow:-$5,300$1,300$2,500$1,700$1,700$1,500$1,300Use the NPV decision rule to evaluate this project. (Negative amount should be indicated by a minus sign. Do not roundintermediate calculations and round your final answer to 2 decimal places.)NPVShould it be accepted or rejected?

Required Return = 7% Year Cash Flow 0 -5300 1 1300 2 2500 3 1700 4 1700 5 1500 6 1300 Year Cash Flow Present Value of Cash Flow = Cash Flow / (1+Cost of capital)Year Working 0 -5300 -5300.00 (-)5300/(1.07)^0 1 1300 1214.95 1300/(1.07)^1 2 2500 2183.60 2500/(1.07)^2 3 1700 1387.71 1700/(1.07)^3 4 1700 1296.922 1700/(1.07)^4 5 1500 1069.479 1500/(1.07)^5 6 1300 866.245 1300/(1.07)^6 SUM = 2718.90 NPV = Sum of present value of cash flows NPV = 2718.90 The project should be accepted since it has a positive net present value and adds value to the firm and shareholder's wealth.

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Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects c his risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 vears, respectively. Time: 1 4 5 Cash flow: -$5,300 $1,300 $2,500 $1,700 $1,700 $1,500 $1,300 Use the NPV decision rule to evaluate this project. (Negative amount should be indicated by a minus sign. Do not round ntermediate calculations and round your final answer to 2 decimal places.) NPV

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects c his risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 vears, respectively. Time: 1 4 5 Cash flow: -$5,300 $1,300 $2,500 $1,700 $1,700 $1,500 $1,300 Use the NPV decision rule to evaluate this project. (Negative amount should be indicated by a minus sign. Do not round ntermediate calculations and round your final answer to 2 decimal places.) NPV

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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Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. Time 1 2 3 Project A Cash Flow Project B Cash Flow -25,000 15,000 35,000 6,000 -35,000 15,000 25,000 55,000 Use the NPV decision rule to evaluate these projects; which one(s) should be accepted or rejected? Multiple Choice Accept A, reject B Accept neither A nor B Accept both A and B Reject A, accept B
Vijay shiyal
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: Cash flow: 0 4 -$5,000 $1,200 $2,400 $1,600 $1,600 $1,400 Use the IRR decision rule to evaluate this project. (Do not round intermediate calculations and round your final onswer to 2 decimal places.) Answer is complete but not entirely correct. IRR 6 $1,200 14.00 %
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: 1 2 3 4 Cash flow: -$5,000 $1,270 $2,470 $1,670 $1,670 5 6 $1,470 $1,270 Use the Pl decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) PI Should it be accepted or rejected? O rejected O accepted
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Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 13 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively. Time: 0 1 2 3 4 5 Cash flow: −$255,000 $61,800 $80,000 $133,000 $118,000 $77,200 Use the MIRR decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Should this be Accepted or Rejected
You invest in a project that will produce real cash flows of -$100 in year zero and then $35, $50, and $30 in the discount rate is 15% and the inflation rate is 10%, what is the NPV of the project?
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1. John approached you with a business proposition to invest in a project. The Annual Cash Flows (CF) are uncertain. However, the following probability distribution provides you with expectations: Probability P(CF) Probable Cash Flow (CF) $80.000 $140,000 $180,000 15 55 30 What is the expected Annual Cash Flow from this project? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). ... BIUS Paragraph Arial 10pt A 10:49 PM a 60F Cloudy 5/16/2022 P Type here to search 5 6. 8O
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Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 11 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively. Time 0 1 2 3 4 5 6 Cash Flow -1,040 140 460 660 660 260 660 Use the NPV decision rule to evaluate this project; should it be accepted or rejected?
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