You are considering a project with an initial cost of $8245 and a required return of 11.6%. What is the discounted payback if the expected cash flows are $3148, $3429, $2731, $3048, and $3930 respectively over the next 5 years? a. 3.66 years b. 3.66 years c. 3.36 years ✔ d. 2.96 years e. 2.98 years

You are considering a project with an initial cost of $8245 and a required return of 11.6%. What is the discounted payback if the expected cash flows are $3148, $3429, $2731, $3048, and $3930 respectively over the next 5 years? a. 3.66 years b. 3.66 years c. 3.36 years ✔ d. 2.96 years e. 2.98 years

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 a project has the following cash flows. What is the NPV if the cost of the project is $105,000 and the required return is 9.75%? Year Cash Flow $28.000 32,000 3 36,000 4 39,000 O$6,000 O $20,678 $1,193 $27,335 O $30,000 Page 16 of 30
0 Question 3 A) A project requires the following cash outlays: $10,000 now and $5,000 a year from now. The project will give a cash return of $5,000 annually for 6 years, the first payment coming in after 3 years. The risk-free rate is 6%. If the proper discount rate is 12%, would you accept this project? B) Evaluate a project with a construction period of 3 years, an operating period of 15 years, and an initial investment of $30,000,000. The project generates annual cash flows of $7,000,000 during the operating phase. Calculate the NPV and IRR for the entire project, including both phases, using a discount rate of 10%. C) Describe the different risk and mitigation techniques that may be used in a power plant project, in controlling (a) engineering risk; (b) completion risk; and (c) market risk. 6:24 PM ✓
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