Answered: You have an opportunity to invest…

You have an opportunity to invest $107,000 now in return for $79,700 in one year and $29,800 in two years. If your cost of capital is 8.7%, what is the NPV of this investment?

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

See similar textbooks

Related questions

Q: ,what is the NPV of this investment?

A: Net Present Value: It is a measure of profitability and shows the absolute profit or loss made from…

Q: You have a goal of having $250,000 five years from today. The return on the investment is expected…

A: We need to use present value formula to calculate the amount needed to invest today( PV).Amount…

Q: ou are considering an investment opportunity that yields $520 one year from today, $900 in two…

A: PV = sum of (Cashflow/(1+r)^1 +.......Cashflow/(1+r)^n)

Q: You are considering an investment that will cost $15,000 and generate returns of $4,000 at the end…

A: Whenever an individual or a corporation has to evaluate the investment based upon the feasibility of…

Q: Your firm has a risk-free investment opportunity with an initial investment of $250,000 today and…

A: Present value = $250,000Future value = $266,000Number of years = 1

Q: What is the most you would be willing to pay for an investment that will pay you $537 in one year,…

Q: You are deciding between two mutually exclusive investment opportunities. Both require the same…

A: Given: Cost of capital 6.60% Growth rate 2.30% Year Particulars Investment A…

Q: The initial cost of an investment is $65,000 and the discount rate (cost of capital) is 12%. The…

A: Initial Cost = i = $65,000Discount Rate = r = 12%Cash Flow per Year = c = $16,000Time = t = 8 Years

Q: You are considering an investment that will cost $15,000 and generate returns of $4,000 at the end…

A: NPV is the sum of present value of future cashflows less initial investment

Q: You have been offered a unique investment opportunity. If you invest $10,000 today, you will receive…

A: Net present value is the modern method of capital budgeting that is used to determine the present…

Q: Let's say you have the opportunity to invest in a project that will require you to invest…

Q: An investment of P100,000 is expected to yield a regular annual net income of P25,000 per year for…

A: Calculation of benefit cost ratio are as follows

Q: You invest in a project that is expected to generate fixed annual cashflows for 4 years beginning in…

A: The movement of funds into and out of a financial system or firm over a predetermined length of time…

Q: You have been offered a unique investment opportunity. If you invest, $10400 ?today, you will…

A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…

Q: You currently have $8,700 to invest. You can invest the full amount now for a period of 9 years at…

A: Final Value after 9 years = $15,000Initial Value = $8,700Number of years (n) = 9

Q: Invest $12,000 today and $10,000 in four years. Receive $15,000 in six years and $20,000 in eleven…

A: The difference between the current value of cash inflows and outflow of cash over a period of time…

Q: Question: A project pays $2000 today, costs $5000 a year from now, and pays $12, 500 in two years.…

A: Here, Cash inflow in year 0 is $2,000 Cash Outflow in Year 1 is $5,000 Cash Inflow in Year 2 is…

Q: If you invest $4,874 in a long-term venture, you will receive $1,035 per year forever. Assuming your…

A: Formula to calculate the capitalized worth of investment is:CW = A/iwhere CW is the capitalized…

Q: You are deciding between two mutually exclusive investment opportunities. Both require the same…

A: Given Initial investment is $10.3 million Cash inflows of A is $2.17 million Cash inflows of B is…

Q: You have an opportunity to invest $50,400 now in return for $60,100 in one year. If your cost of…

A: Net Present value equal to present value of cash flow minus initial investment

Q: You have an opportunity to invest $102,000 now in return for $79,100 in one year and $30,200 in two…

A: The objective of this question is to calculate the Net Present Value (NPV) of an investment…

Q: You have an opportunity to invest $100,000 now in return for $79,600 in one year and $30,300 in two…

A: Given: Year Particulars Amount 0 Initial investment -$100,000 1 Cash inflows $79,600 2 Cash…

Q: You are evaluating a project with the following cash flows. Year 1 5% ? = $30 and year 2 = $90. The…

A: The objective of the question is to understand the impact of an increase in the discount rate on the…

Q: An investment of S12, 000 today will pay out 6 annual payments. The firstpayment will be S2, 500 .…

A: The problem is asking us to calculate the internal rate of return (IRR) for an investment of $12,000…

Q: The initial cost of an investment is $60,000 and the discount rate (cost of capital) is 8%. The…

A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…

Q: You have an opportunity to invest $100,000 now in return for $80,000 in one year and $30,000 in two…

A: NPV : It is defined as the sum of the present values of all future cash inflows less the sum of the…

Q: You have an opportunity to invest $49,200 now in return for $60,900 in one year. If your cost of…

A: Net Present Value(NPV) is one of the modern techniques of capital budgeting which considers the time…

Q: You have an opportunity to invest $50,100 now in return for $59,800 in one year. If your cost of…

A: Amount Invested now is $50,100 Amount returned in one year is $59,800 Cost of capital is 8.2% To…

Q: Suppose you have an investment offer that guarantees an average investment gain of $1,000 per year.…

A: The average rate of change describes the rate at which one quantity changes in relation to another.…

Q: 6,986 today and it will generate $9,412 in a year. You would have extra idle fund of $2,935 after…

A: Net present value is the difference between the present value of cash minus the initial investment…

Q: Suppose you buy a machine and you have the option of paying the full price, $40,000, now; or $10,000…

A: Here, Option -1 is paying $40,000 now Option -2 is Paying 10,000 each at the each of the next five…

Q: what is the NPV of this investment?

A: Information Provided: Discount rate = 7% Annual Cash Inflow = $2Million Initial Cash Outflow = $25…

Q: How long will it take for an Investment of P3,500,000 to earn P1,525,250 if invested at the rate of…

A: The future value is the amount that will be received at the end of a certain period. In simple…

Q: If PV=$100, i=2%, n=5 years, and the investment compounds annually, what is the equation for Future…

A: Given Information: Present Value (PV) : $ 100 Rate (i) : 2 % Time Period (n) : 5 years

Q: You have been offered a unique investment opportunity. If you invest $8,300 today, you will receive…

A: Net present value (NPV) is the difference between present value of all cash inflows and initial…

Q: What will be the better option, receive 100,000 now or receive 250,000 six years from now? The…

A: To find out the better option we need to calculate the present value of 250,000 by using below…

Q: CONSIDERING THAT: You want to make an initial investment of $100,000, and maintain a constant…

A: Owning a stock, bond, or other financial instrument is considered a portfolio investment when it…

Q: What is the profitability index of a project that costs $87 and returns $42 annually for 8 years if…

A: Introduction Profitability Index As the word states, PI(Profitability index measures the ratio…

Q: What is the NPV of a project that costs $0.5 million and cash inflows $6000 /month paid annualy for…

A: Data given: Initial cost = $0.5 million Cash inflow per month=$6000 N=10 years Cost of capital=6%…

Q: comma 900 in one year. If your cost of capital is 7.6 %, what is the NPV of this investment?

A: The net present value calculation aids in determining whether an investment will yield a higher…

Q: If you insulate your office for $16000 you will save 1600 a year in heating exp. these savings will…

A: The provided information are: Initial Investment = $16000 Saving = $1600

Q: ou are deciding between two mutually exclusive investment opportunities. Both require the same…

A: IRR is the discount rate that causes NPV = 0. NPV is the net of the present value of cash outflows…

Q: You have an investment opportunity that promises to pay you $16,000 in four years. Suppose the…

A: In the context of the time value of money (TVM), interest rates play a critical role. The time value…

Q: You have an opportunity to invest $106,000 now in return for $79,300 in one year and $29,100 in…

A: Data given: Initial Investment ($) = 106,000 Cash flow(Year 1) = $ 79300 Cash flow (Year 2) = $…

Q: If you invest $5,000 today, you will receive $1,000 in a year, $1,500 each in year 2 and year 3, and…

A: Calculate the net present value as follows:

Question

You have an opportunity to invest

$107,000

now in return for

$79,700

in one year and

$29,800

in two years. If your cost of capital is

8.7%,

what is the NPV of this investment?

The NPV will be

(Round to the nearest cent.)

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $9.6 million. Investment A will generate $1.86 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.55 million at the end of the first year, and its revenues will grow at 2.2% per year for every year after that. Which investment has the higher IRR? (Round to the nearestinteger.) Which investment has the higher NPV when the cost of capital is 7.8%? In this case, for what values of the cost of capital does picking the higher IRR give the correct answer as to which investment is the best opportunity?
3
If a particular investment will pay $500, 5 months from now, and an additional $500, 9 months from now, what is the largest amount that an investor should be willing to invest today, assuming money earns a rate of return of 7%? Assume that the investment has no money left after the two withdrawals.
Please correct answer and don't use hend raiting
What is the NPV of a project that COSTS $0.5M today and cash inflows $5,000 monthly, paid annually, for ten years from today if the opportunity cost of capital is 6% ?
A firm is considering three possible one-year investments, which we will name X, Y, and Z. ∙ Investment X would cost $10 million now and would return $11 million next year, for a net gain of $1 million. ∙ Investment Y would cost $100 million now and would return $105 million next year, for a net gain of $5 million. ∙ Investment Z would cost $1 million now and would return $1.2 million next year, for a net gain of $200,000. The firm currently has $150 million of cash on hand that it can loan out at 15 percent interest. Which of the three possible investments should it undertake? a. X only. b. Y only. c. Z only. d. X and Y. e. X and Z. f. X, Y, and Z.
Please answer the question. The details of the question are attached in the image below.
You have an opportunity to invest $106 000 now in return for S00,100 in one yoar and $30 400 in two years If your cost of capital is 8 9% what is the NPV of this investment? The NPV will be S (Round tó the nearest cent)
You are considering an investment with the following characteristics. The investment will cost you $551 today, but will pay you annual benefits of $107 for 11 years starting at the end of the first year. The relevant opportunity cost of capital is 9%. What is the NPV of this investment? Round your answer to two decimals. Enter negative values with a - sign. Don't enter the $-symbol as part of your answer.
An investment has a cost of $3500. The investment will have a payout of X at the end of the first year. This initial payout X will grow at the rate of 12% per year for the next 4 years, then by 7% per year for the next 4 years, and then at the rate of 3% per year for the following 3 years. You believe the riskiness of this investment is 9%. Calculate the smallest X that would entice you to invest.
K You have been offered a unique investment opportunity. If you invest $11,300 today, you will receive $565 one year from now, $1,695 two years from now, and $11,300 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.7% per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.7% per year? Should you take it now? a. What is the NPV of the opportunity if the cost of capital is 5,7% per year? If the cost of capital is 5.7% per year, the NPV is $. (Round to the nearest cent.)
You are making a $120,000 investment and feel that a 22% rate of return is reasonable, given the nature of the risks involved. You expect to receive $48,000 in the first year, $54,000 in the second year, and $76,000 in the third year. You expect to pay out $12,000 as a disposal cost in the fourth year. What is the net present value of this investment given your expectations?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS