Whispering Winds Company is considering a long-term investment project called ZIP ZIP will require an investment of $130,000. It will have a useful life of four years and no salvage value. Annual cash inflows would increase by $81,000, and annual cash outflows would increase by $-40.500. In addition, the company's required rate of return is 10% Click here to view the factor table (a) Calculate the net present value on this project. Of the answer is negative, use either a negative sign preceding the number eg -5,275 or parentheses es (5,275). For calculation purposes, use 5 decimal places as displayed in the factor table provided, eg. 1.25124 and final answer to 0 decimal places, eg. 5,275) Net present value $ Identify whether the project should be accepted or rejected. The project should be

Whispering Winds Company is considering a long-term investment project called ZIP ZIP will require an investment of $130,000. It will have a useful life of four years and no salvage value. Annual cash inflows would increase by $81,000, and annual cash outflows would increase by $-40.500. In addition, the company's required rate of return is 10% Click here to view the factor table (a) Calculate the net present value on this project. Of the answer is negative, use either a negative sign preceding the number eg -5,275 or parentheses es (5,275). For calculation purposes, use 5 decimal places as displayed in the factor table provided, eg. 1.25124 and final answer to 0 decimal places, eg. 5,275) Net present value $ Identify whether the project should be accepted or rejected. The project should be

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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Compute the net present value of this investment.
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You are considering opening a new plant. The plant will cost $104.8 million upfront and will take one year to build. After that, it is expected to produce profits of $28.2 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 7.8%. Should you make the investment? Calculate the IRR. Does the IRR rule agree with the NPV rule?

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