Question

In: Finance

A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash...

A firm evaluates all of its projects by using the NPV decision rule.

  

Year                 Cash Flow
0 –$28,000      
1 20,000      
2 13,000      
3 4,000      

  

Required:
(a) At a required return of 23 percent, what is the NPV for this project?
(Click to select)  -1,017.48  -997.53  -957.63  -1,047.41  -977.58

  

(b) At a required return of 36 percent, what is the NPV for this project?
(Click to select)  -4,581.89  -4,768.91  -4,909.17  -4,488.39  -4,675.4

Solutions

Expert Solution

Ans a) -997.53

Ans b) -4,675.4

Year Project Cash Flows (i) DF@ 23% DF@ 23% (ii) PV of Project ( (i) * (ii) ) DF@ 36% (iii) PV of Project ( (i) * (iii) )
0 -28000 1 1                          (28,000.00) 1             (28,000.00)
1 20000 1/((1+23%)^1) 0.813008                             16,260.16 0.735               14,705.88
2 13000 1/((1+23%)^2) 0.660982                               8,592.77 0.541                  7,028.55
3 4000 1/((1+23%)^3) 0.537384                               2,149.54 0.398                  1,590.17
NPV                                (997.53) NPV               (4,675.40)

jeff jeffy answered 3 years ago
Next > < Previous

Related Solutions

A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash...
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash Flow 0 –$31,000       1 22,000       2 12,000       3 7,000          a. At a required return of 13 percent, what is the NPV for this project?    b. At a required return of 40 percent, what is the NPV for this project?
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash...
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash Flow 0 –$29,000       1 22,000       2 16,000       3 8,000          a. At a required return of 16 percent, what is the NPV for this project?    b. At a required return of 32 percent, what is the NPV for this project?
A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow...
A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 –$28,000 1 21,000 2 14,000 3 9,000 a. At a required return of 24 percent, what is the NPV for this project? b. At a required return of 40 percent, what is the NPV for this project?
A firm evaluates all of its projects by using the NPV decision rule. Year   Cash Flow...
A firm evaluates all of its projects by using the NPV decision rule. Year   Cash Flow 0   –$30,000 1   18,000 2   17,000 3   10,000    a. At a required return of 13 percent, what is the NPV for this project? 6173 6482 5926 6297 6050 b. At a required return of 35 percent, what is the NPV for this project? -3438.12 -3143.42 -3339.89 -3208.91 -3274.40
A firm evaluates all of its projects by using the NPV decision rule. At a required...
A firm evaluates all of its projects by using the NPV decision rule. At a required return of 12 percent, the NPV for the following project is $ and the firm should the project. At a required return of 31 percent, the NPV is $ and the firm should the project. (Do not include the dollar signs ($). Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16)) Year Cash Flow 0...
A firm evaluates all of its projects by applying the NPV decision rule. A project under...
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows:    Year Cash Flow 0 –$ 27,400 1 11,400 2 14,400 3 10,400    What is the NPV for the project if the required return is 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      NPV $       At a required return of 12 percent, should the firm accept...
A firm evaluates all of its projects by applying the NPV decision rule. A project under...
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows:    Year Cash Flow 0 –$ 28,600 1 12,600 2 15,600 3 11,600    What is the NPV for the project if the required return is 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At a required return of 11 percent, should the firm accept this project? Yes No...
1. A firm evaluates all of its projects by applying the NPV decision rule. A project...
1. A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 $ -34,000 1 15,000 2 17,000 3 13,000 If the NPV = $1.27, should the firm accept this project? A) Yes B) No 2.   If the NPV of the above project is as stated above, how much value does it add to the firm, compared to investing in an Opportunity Cost Investment project?...
A firm evaluates all of its projects by applying the NPV decision rule. A project under...
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows:    Year Cash Flow 0 $ -27,700 1 11,700 2 14,700 3 10,700    What is the NPV for the project if the required return is 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)    At a required return of 12 percent, should the firm accept this project? Yes...
A firm evaluates all of its projects by applying the NPV decision rule. A project under...
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flows 0 -3477 1 1468 2 2290 3 1948 What is the NPV for the project if the required return is 11 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT