You are considering an investment opportunity that requires an initial investment of $18,000 and is expected...

You are considering an investment opportunity that requires an initial investment of $18,000 and is expected to provide an annual cash flows of $1,450 for the first three years, then an annual cash flow of $1,620 for the next four years, then a final cash flow of $24,000 one year later. If your required rate of return is 9%, what is net present value of this opportunity?

Enter your answer rounded to the nearest penny but do not include any punctuation.

Solutions

Expert Solution

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Kiewitt is considering a project opportunity that requires a lump sum of initial investment (cash outflow)...

Kiewitt is considering a project opportunity that requires a lump sum of initial investment (cash outflow) of $604.02 today. This project is expected to generate cash inflows of $150 in year 1, $Y in year 2 (due to uncertainty), $250 in year 3 and $300 in year 4. If Kiewitt requires 11% annual return for this project, what would be the minimum expected cash flow in year 2 (what is Y)? A. $88.65 B. $109 C. $200 D. $275 E....

Caribbean, Inc. is considering a new investment opportunity. The project requires an initial outlay of $525,000...

Caribbean, Inc. is considering a new investment opportunity. The project requires an initial outlay of $525,000 and is expected to bring in a $75,000 cash inflow at the end of the first year. After the first year, annual cash flows from the project are forecasted to grow at a constant rate of 5% until the end of the fifth year and to remain constant forever thereafter. The company currently has a target debt-to-equity ratio of .40, but the industry that...

You are considering a safe investment opportunity that requires a $870 investment today, and will pay...

You are considering a safe investment opportunity that requires a $870 investment today, and will pay $540 two years from now and another $640 five years from now. a. What is the IRR of this investment?

Project S requires an initial outlay at t = 0 of $18,000, and its expected cash...

Project S requires an initial outlay at t = 0 of $18,000, and its expected cash flows would be $4,000 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $29,000, and its expected cash flows would be $14,900 per year for 5 years. If both projects have a WACC of 13%, which project would you recommend? Select the correct answer. a. Both Projects S and L, since both projects have IRR's...

A project requires an initial investment of $200,000 in a machine and is expected to produce...

A project requires an initial investment of $200,000 in a machine and is expected to produce cost savings of $120,000 each year for two years. The tax rate is 30%. The machine will be depreciated using the MACRS 3-year schedule (first year 33%, second year 45%, third year 15% and fourth year 7%). The machine can be sold for $50,000 after two years. The project’s required return is 11%. (1) What is the initial cash flow at t=0? (2) What are the...

Q1) A project requires an initial investment of $5,000. It is expected that the project will...

Q1) A project requires an initial investment of $5,000. It is expected that the project will last 3 years and generate net cash flows of $3,500 for each of these years. If the discount rate for the project is 10%, the discounted payback period for the project.is: Select one: a. 1.63 years b. 2.55 years c. 1 year d. More than 3 years Q2) Capital rationing refers to the limiting of capital resources to under-performing divisions. Select one: True False...

Nielson Motors is considering an opportunity that requires an investment of $1,000,000 today and will provide...

Nielson Motors is considering an opportunity that requires an investment of $1,000,000 today and will provide $250,000 one year from now, $450,000 two years from now, and $650,000 three years from now. If the appropriate interest rate is 10%, then the NPV of this opportunity is closest to: A. $350,000 B. -$88,000 C. $1,350,000 D. $88,000

A company is considering a project that requires an initial investment of $660,000 and has a...

A company is considering a project that requires an initial investment of $660,000 and has a useful life of 11 years. Expected cash receipts from the project will be $175,000 each year. The salvage value of the assets used in the project will be $75,000. The company’s tax rate is 30%. For tax purposes, the entire initial investment (without any reduction for salvage value) will be depreciated over 11 years. The company uses a discount rate of 21%. Provide the...

A company is considering a project that requires an initial investment of $660,000 and has a...

A company is considering a project that requires an initial investment of $660,000 and has a useful life of 11 years. Expected cash receipts from the project will be $195,000 each year. The salvage value of the assets used in the project will be $70,000. The company’s tax rate is 25%. For tax purposes, the entire initial investment (without any reduction for salvage value) will be depreciated over 11 years. The company uses a discount rate of 20%. Provide the...

A company is considering a project that requires an initial investment of $810,000 and has a...

A company is considering a project that requires an initial investment of $810,000 and has a useful life of 12 years. Expected cash receipts from the project will be $190,000 each year. The salvage value of the assets used in the project will be $75,000. The company’s tax rate is 35%. For tax purposes, the entire initial investment (without any reduction for salvage value) will be depreciated over 12 years. The company uses a discount rate of 17%. Provide the...

Subjects