Question
In: Finance
Kinetics is considering a project that has a NINV of $874,000 and generates net cash flows...
Kinetics is considering a project that has a NINV of $874,000 and generates net cash flows of $170,000 per year for 12 years. What is the NPV of this project if Kinetics cost of capital is 14%?
Solutions
Expert Solution
NPV Calculation
NPV is the sum of the present value of all the future cash flows:
Following table shows the cash flows of the investment:
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |
| Cash flows | -874000 | 170000 | 170000 | 170000 | 170000 | 170000 | 170000 | 170000 | 170000 | 170000 | 170000 | 170000 | 170000 |
C0 = -874000
C1 = C2 =.....= C12 = 170000
NPV = C0 + C1/(1+r)1 + C2/(1+r)2 + C3/(1+r)3 + C4/(1+r)4 + C5/(1+r)5 + C6/(1+r)6 + C7/(1+r)7 + C8/(1+r)8 + C9/(1+r)9 + C10/(1+r)10 + C11/(1+r)11 + C12/(1+r)12
Cost of capital = r = 14%
NPV = -874000 + 170000/(1.14)1 + 170000/(1.14)2 + 140000/(1.14)3 + 170000/(1.14)4 + 170000/(1.14)5 + 170000/(1.14)6 + 170000/(1.14)7 + 170000/(1.14)8 + 170000/(1.14)9 + 170000/(1.14)10 + 170000/(1.14)11 + 170000/(1.14)12
NPV = $88249.661334
Answer -> 88249.66 (Rounded to two decimals places)
jeff jeffy answered 3 months agoRelated Solutions
An independent project has a net investment of $260,000, and generates net cash flows of $88,000...
An independent project has a net investment of $260,000, and
generates net cash flows of $88,000 for 5 years. The required rate
of return in 20%. Compute the net present value.
Group of answer choices
12056.76
3173.87
4537.89
10450.56
CoveAuklaOoglu, Inc. is considering a project which has net cash flows (the same as free cash flows) given below:
CoveAuklaOoglu, Inc. is considering a project which has net cash flows (the same as free cash flows) given below:Year CF ($)0 -1,000 (Initial Outlay)1 5002 4003 3004 100Given that the company’s WACC is 10%, what is the company’s NPV? (Points : 3.4)
$78.82 $109.45 $49.18 $54.06
Garrod Dickens wants to calculate the IRR for the above project (use information in Question 22) for CoveAuklaOoglu, Inc. His answer would be: (Points : 3.4)
11.8% 14.5% 12.45% 13.02%
Garrod Dickens also wants to...
Citrus Company is considering a project that has estimated annual net cash flows of $21,300 for...
Citrus Company is considering a project that has estimated
annual net cash flows of $21,300 for six years and is estimated to
cost $100,000. Citrus’s cost of capital is 8 percent.
Determine the net present value of the project. (Future Value of
$1, Present Value of $1, Future Value Annuity of $1, Present Value
Annuity of $1.) (Use appropriate factor(s) from the tables
provided. Negative amount should be indicated by a minus sign.
Round your final answer to 2...
Citrus Company is considering a project that has estimated annual net cash flows of $21,300 for...
Citrus Company is considering a project that has estimated
annual net cash flows of $21,300 for six years and is estimated to
cost $100,000. Citrus’s cost of capital is 8 percent.
Determine the net present value of the project. (Future Value of
$1, Present Value of $1, Future Value Annuity of $1, Present Value
Annuity of $1.) (Use appropriate factor(s) from the tables
provided. Negative amount should be indicated by a minus sign.
Round your final answer to 2...
Citrus Company is considering a project that has estimated annual net cash flows of $41,535 for...
Citrus Company is considering a project that has estimated
annual net cash flows of $41,535 for seven years and is estimated
to cost $195,000. Citrus’s cost of capital is 12 percent.
Determine the net present value of the project. (Future Value of
$1, Present Value of $1, Future Value Annuity of $1, Present Value
Annuity of $1.) (Use appropriate factor(s) from the tables
provided. Negative amount should be indicated by a minus sign.
Round your final answer to 2...
A project has the following total (or net) cash flows. ________________________________________
A project has the following total (or net) cash flows.
________________________________________
Year Total (or net)
cash flow
________________________________________
1 $50,000
2 70,000
3 80,000
4 100,000
_______________________________________
The required rate of return on the project is 13 percent. The
initial investment (or initial cost or initial outlay) of the
project is $100,000.
a) Find the (regular) payback period of the project.
b) Compute the discounted payback period of the project.
6. A project has the following...
Question 22.22. CoveAuklaOoglu, Inc. is considering a project which has net cash flows (the same as...
Question 22.22. CoveAuklaOoglu, Inc. is
considering a project which has net cash flows (the same as free
cash flows) given below:
Year
CF ($)
0
-1,000 (Initial Outlay)
1
500
2
400
3
300
4
100
Given that the company’s WACC is 10%, what is the company’s NPV?
(Points : 3.4)
$78.82
$109.45
$49.18
$54.06
Question 23.23. Garrod Dickens wants to
calculate the IRR for the above project (use information in
Question 22) for CoveAuklaOoglu, Inc....
A project has the following total (or net) cash flows. __________________________________________ &nbs
A project has the following total (or net) cash flows.
__________________________________________
Year Total
(or net) cash flow
_________________________________________
1 $20,000
2 30,000
3 50,000
4 60,000
_________________________________________
The required rate of return on the project is 15 percent. The
initial investment (or initial cost or initial outlay) of the
project is $80,000.
a) Find the net present value (NPV) of the project.
b) Find the profitability index (PI) of the project.
c) Calculate the modified internal rate...
A project has the following total (or net) cash flows. __________________________________________ &nbs
A project has the following total (or net) cash flows.
__________________________________________
Year Total
(or net) cash flow
_________________________________________
1 $20,000
2 30,000
3 50,000
4 60,000
_________________________________________
The required rate of return on the project is 15 percent. The
initial investment (or initial cost or initial outlay) of the
project is $80,000.
a) Find the net present value (NPV) of the project.
b) Find the profitability index (PI) of the project.
c) Calculate the modified internal rate...
Here are the net cash flows for a project your company is considering: Year 0 =...
Here are the net cash flows for a project your company is
considering: Year 0 = -1000 Year 1 = 250 Year 2 = 449 Year 3 = 800
Year 4 = 500 Year 5 = 500 If the payback period with interest is 3
years, for what range of interest rates is this project worth doing
(start your analysis with an interest rate of 0%)? ** Kindly just
don’t directly draw the table with values in it, it’ll be...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- • Using the Scanner class to obtain input from the user. • Using printf to output...
- In each of the following situations, develop a tentative plan for the client. List the various...
- MARGI sells different types of wine. Customers place orders to the most popular “Summer Wine” at...
- Java. If possible please put explanations for each line of code. Write a test program that...
- . Use the following information to calculate your company's expected return State Probability Return Boom 20%...
- You are considering the following two projects and can only take one. Your cost of capital...
- C++: Write a program that produces truth tables for the following compound propositions. Write the header...
ADVERTISEMENT