You see an opportunity to invest $1 million in a business. The investment is expected to generate a cash flow of $250000 per year over the next five years. Assuming a discount rate is 5%, would it be a sound decision to invest in this business?
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You see an opportunity to invest $1 million in a business. The investment is expected to generate a cash flow of $250000 per year over the next five years. Assuming a discount rate is 5%, would it be a sound decision to invest in this business?
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- Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?You see an opportunity to invest $1 million in a business. The investment is expected to generate cash flows of $250,000 per year over the next five years. Assuming a discount rate of 5%, would it be a sound decision to invest in this business?Your organization has been asked to invest in a continuing care retirement center. Your investment will be $600,000 per year for the next 5 years. After 5 years, cash flows will be $400,000 per year for the next 15 years. If your discount rate is 10%:(a) what is the present value of the investment?(b) what is the present value of the cash flows?(c) what is the profitability index?
- You have an investment opportunity that promises to pay you $18,000 in four years. You could earn a 5% annual return investing elsewhere. What is the maximum amount you would be willing to invest in this opportunity? Note: Use tables, Excel, or a financial calculator. Round your final answer to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)use excel 3. You are considering investing in a startup company called Minions Technologies. After careful analysis, you determine that Minions will be able to generate $100,000 in cash flow at the end of each year for the first 5 years. Then, Minions will generate cash flow of $400,000 at the end of the 6th year, after which it will grow at 11% per year forever. Using a discount rate of 18%, what is the amount you would be willing to invest?An investor is considering the following opportunity: He will put capital into a start-up company today. He will not receive any cash flows from the investment until end of the 5th year. At that point, he will receive 11.00 years of $20,000.00 per year. If his discount rate on this investment is 14.00%, what is the value of this opportunity today?
- you are planning to start a business with an initial capital of P100,000. you decided to put up a fund with deposits made at the end of each month. if you want to gain the initial capital after 4 years, how much monthly deposit must be made? what should be the interest rate in order to achieve the possible amount needed? how are you going to invest your money that in short period of time so that you can start your business smoothly?You are considering a safe investment opportunity that requires a $1,450 investment today, and will pay $950 two years from now and another $710 five years from now. a. What is the IRR of this investment? b. If you are choosing between this investment and putting your money in a safe bank account that pays an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR with the IRR of the investment? Explain. a. What is the IRR of this investment? The IRR of this investment is %. (Round to two decimal places.)Think about the cash flows associated with putting in the bank for five years, assuming you draw out the interest each year and then close the account. Now think about a set of hypothetical cash flows associated with putting the same money in a business, operating for five years, and then selling out. Write an explanation of why the IRR on the business project is like the bank’s interest rate. How are the investments different?
- You have been offered a unique investment opportunity. If you invest $10,000 today, you will receive $500 one year from now, $1,500 two years from now, and $10,000 ten years from now. a. What is the NPV of the investment opportunity if the interest rate is 8% per year? Should you take the opportunity? b. What is the NPV of the investment opportunity if the interest rate is 4% per year? Should you take the opportunity? a. What is the NPV of the investment opportunity if the interest rate is 8% per year? The NPV of the investment opportunity if the interest rate is 8% per year is $. (Round to the nearest dollar.) Should you take the investment opportunity (Select the best choice below.) A. Reject it because the NPV is less than 0. B. Take it because the NPV is equal to or greater than 0. b. What is the NPV of the investment opportunity if the interest rate is 4% per year? The NPV of the investment opportunity if the interest rate is 4% per year is $ (Round to the nearest dollar.) Should…You are considering a safe investment opportunity that requires a $1,080 investment today, and will pay $710 two years from now and another $610 five years from now. a. What is the IRR of this investment? b. If you are choosing between this investment and putting your money in a safe bank account that pays an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR with the IRR of the investment? Explain. a. What is the IRR of this investment? The IRR of this investment is _____________%. (Round to two decimal places.)Suppose you invest $2,000 today and receive $11,000 in five years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $2,000 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the amount you will receive each year?