Whether the cash-flow break-even level of sales is lower or higher than the zero-profit break-even point

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Answer 1

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Chapter 10, Problem 13QP

a.

Summary Introduction

To determine: Whether the cash-flow break-even level of sales is lower or higher than the zero-profit break-even point

b.

Summary Introduction

To determine: Whether the NPV positive or negative when a project works at cash-flow break-even for all future years.

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Year Free Cash Flow (FCF) 0 -$17,000,000 1 $4,980,000 2 $4,980,000 3 $4,980,000 4 $4,980,000 5 $6,980,000 The Net Present Value at a discount rate of 15%: Present Value (PV) for each year: PV(Year 1) = $4,980,000 ÷ (1 + 0.15)^1 = $4,330,435. PV(Year 2) = $4,980,000 ÷ (1 + 0.15)^2 = $3,765,590. PV(Year 3) = $4,980,000 ÷ (1 + 0.15)^3 = $3,274,426. PV(Year 4) = $4,980,000 ÷ (1 + 0.15)^4 = $2,847,328. PV(Year 5) = $6,980,000 ÷ (1 + 0.15)^5 = $3,477,617. Sum of PVs = $4,330,435 + $3,765,590 + $3,274,426 + $2,847,328 + $3,477,617 = $17,695,396. Initial Investment = $17,000,000. NPV = Total PV - Initial Investment = $17,695,396 - $17,000,000 = $695,396. Calculate The Internal Rate of Return

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Answer 2

Question

Chapter 10, Problem 13QP

a.

Summary Introduction

To determine: Whether the cash-flow break-even level of sales is lower or higher than the zero-profit break-even point

b.

Summary Introduction

To determine: Whether the NPV positive or negative when a project works at cash-flow break-even for all future years.

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Answer 3

Question

Chapter 10, Problem 13QP

a.

Summary Introduction

To determine: Whether the cash-flow break-even level of sales is lower or higher than the zero-profit break-even point

b.

Summary Introduction

To determine: Whether the NPV positive or negative when a project works at cash-flow break-even for all future years.

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Answer 4

Question

Chapter 10, Problem 13QP

a.

Summary Introduction

To determine: Whether the cash-flow break-even level of sales is lower or higher than the zero-profit break-even point

b.

Summary Introduction

To determine: Whether the NPV positive or negative when a project works at cash-flow break-even for all future years.

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Answer 5

Chapter 10, Problem 13QP

a.

Summary Introduction

To determine: Whether the cash-flow break-even level of sales is lower or higher than the zero-profit break-even point

b.

Summary Introduction

To determine: Whether the NPV positive or negative when a project works at cash-flow break-even for all future years.

Answer 6

Chapter 10, Problem 13QP

a.

Summary Introduction

To determine: Whether the cash-flow break-even level of sales is lower or higher than the zero-profit break-even point

Answer 7

Chapter 10, Problem 13QP

a.

Summary Introduction

To determine: Whether the cash-flow break-even level of sales is lower or higher than the zero-profit break-even point

Answer 8

b.

Summary Introduction

To determine: Whether the NPV positive or negative when a project works at cash-flow break-even for all future years.

Answer 9

b.

Summary Introduction

To determine: Whether the NPV positive or negative when a project works at cash-flow break-even for all future years.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 10 - Prob. 1QP Ch. 10 - Prob. 2QP Ch. 10 - Prob. 3QP Ch. 10 - Prob. 4QP Ch. 10 - Prob. 5QP Ch. 10 - Prob. 7QP Ch. 10 - Prob. 8QP Ch. 10 - Prob. 9QP Ch. 10 - Prob. 10QP Ch. 10 - Prob. 11QP

Whether the cash-flow break-even level of sales is lower or higher than the zero-profit break-even point

To determine: Whether the cash-flow break-even level of sales is lower or higher than the zero-profit break-even point

To determine: Whether the NPV positive or negative when a project works at cash-flow break-even for all future years.

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