Question
In: Finance
Comparing all methods. Risky Business is looking at a project with the following estimated cash flow:...
Comparing all methods. Risky Business is looking at a project with the following estimated cash flow:
Initial investment at start of project: $10,700,000
Cash flow at end of year one: $1,819,000
Cash flow at end of years two through six: $2,140,000 each year
Cash flow at end of years seven through nine: $2,000,900 each year
Cash flow at end of year ten: $1,539,154
Risky Business wants to know the payback period, NPV, IRR, MIRR, and PI of this project. The appropriate discount rate for the project is 8%. If the cutoff period is 6 years for major projects, determine whether the management at Risky Business will accept or reject the project under the five different decision models.
a) What is the payback period for the new project at Risky Business?
b) Under the payback period, this project would be accepted or rejected?
c) What is the NPV for the project at Risky Business?
d) Under the NPV rule, this project would be accepted or rejected?
e) What is the IRR for the new project at Risky Business?
f) Under the IRR rule, this project would be accpeted or rejected?
g) What is the MIRR for the new project at Risky Business?
h) Under the MIRR rule, this project would be accepted or rejected?
i) What is the PI for the new project at Risky Business?
j) Under the PI rule, this project would be accepted or rejected?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Comparing all methods. Risky Business is looking at a project with the following estimated cash flow:...
Comparing all methods. Risky Business is looking at a project
with the following estimated cash flow: Risky Business wants to
know the payback period, NPV, IRR, MIRR, and PI of this project.
The appropriate discount rate for the project is 12%. If the
cutoff period is 6 years for major projects, determine whether the
management at Risky Business will accept or reject the project
under the five different decision models.
What is the payback period for the new project at...
Comparing all methods. Risky Business is looking at a project with the following estimated cash flow:...
Comparing all methods. Risky Business is looking at a project
with the following estimated cash flow: Initial investment at
start of project: $12,300,000 Cash flow at end of year one:
$2,214,000 Cash flow at end of years two through six: $2,460,000
each year Cash flow at end of years seven through nine:
$2,878,200 each year Cash flow at end of year ten: $2,214,000
Risky Business wants to know the payback period, NPV, IRR, MIRR,
and PI of this project. The...
Comparing all methods. Risky Business is looking at a project with the estimated cash flow as?...
Comparing all methods. Risky Business is looking at a project
with the estimated cash flow as? follows: Initial investment at
start of? project:???$12 comma 600 comma 000 Cash flow at end of
year? one:???$2 comma 268 comma 000 Cash flow at end of years two
through? six:???$2 comma 520 comma 000 each year Cash flow at end
of years seven through? nine:???$2 comma 948 comma 400 each year
Cash flow at end of year? ten:???$2 comma 268 comma 000 Risky...
Risky Business is looking at a project with the following estimated cash flow: Initial investment at...
Risky Business is looking at a project with the following
estimated cash flow:
Initial investment at start of project: $10,000,000
Cash flow at end of year one: $1,700,000
Cash flow at end of years two through six: $2,000 each
year
Cash flow at end of years seven through nine: $2,040,000 each
year
Cash flow at end of year ten: $1,569,231
Risky Business wants to know the payback period, NPV, IRR,
MIRR, and PI of this project. The
appropriate discount rate...
Risky Business is looking at a project with the estimated cash flow as follows: Initial investment...
Risky Business is looking at a project with the estimated cash
flow as follows:
Initial investment at start of project:$12,200,000
Cash flow at end of year one: $2,196,000
Cash flow at end of years two through six:$2,440,000 each
year
Cash flow at end of years seven through nine:$2,635,200 each
year
Cash flow at end of year ten: $2,027,077
Risky Business wants to know the payback period, NPV, IRR, and
PI of this project. The appropriate discount rate for the project...
Comparing all methods. Given the following after-tax cash flow on a new toy for Tyler's Toys,...
Comparing all methods. Given the following after-tax cash flow
on a new toy for Tyler's Toys, find the project's payback
period, NPV, and IRR. The appropriate discount rate for the project
is 12%. If the cutoff period is 6 years for major projects,
determine whether management will accept or reject the project
under the three different decision models. (Click on the following
icon in order to copy its contents into a spreadsheet.) Initial
cash outflow: $11 comma 600 comma 000...
•You are looking at a new project and you have estimated the following cash flows: Year...
•You are looking at a new project and you have estimated the
following cash flows:
Year 0: CF = -$150,000
Year 1-2: CF = $80,000
Year 3-4: CF = $50,000
Year 5-6: CF = $30,000
Year 7: CF = -$180,000
Your cost of capital is 10%
Please calculate NPV and IRR, and
decide whether we should take this project?
1)you've estimated the following cash flows (in$) for a project A. B year. cash flow 0...
1)you've estimated the following cash flows (in$) for a project
A. B
year. cash flow
0 -5,300
1 1,325
2 2,148
3 2,209
what is the IRE for the project
2)you've estimated the following cash flows (in$) for 2
projects:
A. B. C.
year. ProjectA. ProjectB
0. -78 -261
1 15 50
2 21 73
3 29 82
4 35 127
the required return is 7% for both projects
What is the IRR for project B?
What is the...
NPV profile. Siesta, Incorporated is looking at a project and has the appropriate cash flow....
NPV profile. Siesta, Incorporated is looking at a project and
has the appropriate cash flow. However, there is much
disagreement on the appropriate discount rate to use with the
project. Aracely, the CFO, has requested that you provide the
NPV at various interest rates between 0 % and 40 % at 2 %
intervals. That way, when Siesta is able to access the proper
discount rate for this project, it will know if the project is a...
Operating cash flow (growing each year; MACRS). Miglietti Restaurants is looking at a project with the...
Operating cash flow (growing each year; MACRS). Miglietti
Restaurants is looking at a project with the following forecasted
sales: first-year sales quantity of 31,000 with an annual growth
rate of 4.00% over the next ten years. The sales price per unit
will start at $42 and will grow at 2.50% per year. The production
costs are expected to be 55% of the current year's sales price.
The manufacturing equipment to aid this project will have a total
cost (including...
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