Question
In: Finance
An initial cash outlay of $1.4 million is made for a project. In Year 1, the...
An initial cash outlay of $1.4 million is made for a project. In Year 1, the expected annual cash flow is $900,000. In Years 2–5 the expected annual cash flow is $1,000,000, and in Year 6, the expected annual cash flow is $1.3 million. A cost of capital of 15% is used. The IRR (internal rate of return) is ???
Please show work/calculation using Texas Calculator. No excel.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
1. The length of time required to recover the initial cash outlay for a project is...
1. The length of time required to recover the initial cash
outlay for a project is determined by using the:
discounted cash flow method.
net present value method.
simple rate of return method.
payback method.
2. A preference decision in capital budgeting:
is concerned with whether a project clears the minimum required
rate of return hurdle.
involves using market research to determine customers'
preferences.
comes before the screening decision.
is concerned with determining which of several acceptable
alternatives is best....
PROJECT A PROJECT B Initial Outlay -50000 -70000 Inflow year 1
PROJECT
A
PROJECT B
Initial Outlay -50000
-70000
Inflow year 1
12000 13000
Inflow year 2
12000 13000
Inflow year 3
12000 13000
Inflow year 4
12000 13000
Inflow year 5
12000 13000
Inflow year 6
12000 13000
(NPV, PI, and IRR calculations) You are considering two
independent projects, project A and project B. The initial cash
outlay associated with project A is $50000, and the initial cash
outlay associated with project B is $70000. The required rate of...
A project has an initial outlay of $3,640. The project will generate cash flows of $4,565...
A project has an initial outlay of $3,640. The project will
generate cash flows of $4,565 in Years 1-5. What is the Equivalent
Annual Annuity (EAA) of this project? Assume an interest rate of
11%.
Note: Enter your answer rounded off to two decimal points. Do
not enter $ or comma in the answer box. If your answer is negative,
enter your answer as a negative number rounded off to two decimal
points.
A project has an initial outlay of $2,378. The project will generate annual cash flows of...
A project has an initial outlay of $2,378. The project will
generate annual cash flows of $660 over the 4-year life of the
project and terminal cash flows of $202 in the last year of the
project. If the required rate of return on the project is 13%, what
is the net present value (NPV) of the project?
Note: Enter your answer rounded off to two decimal points. Do
not enter $ or comma in the answer box.
You are considering a project with an initial cash outlay of $70,000 and expected free cash...
You are considering a project with an initial cash outlay of
$70,000 and expected free cash flows of $28,000 at the end of
each year for 7 years. The required rate of return for this project
is 6 percent.
a. What is the project's payback period?
b. What is the project's NPV?
c. What is the project's PI?
d. What is the project's IRR?
You are considering a project with an initial cash outlay of $72,000 and expected cash flows...
You are considering a project with an initial cash outlay of
$72,000 and expected cash flows of $22,320 at the end of each
year for six years. The discount rate for this project is 10.5
percent.
a. What are the project's payback and
discounted payback periods?
b. What is the project's NPV?
c. What is the project's PI?
d. What is the project's IRR?
a. The payback period of the project is nothing years.
You are considering a project with an initial cash outlay of $85,000 and expected free cash...
You are considering a project with an initial cash outlay of
$85,000 and expected free cash flows of $20,000 at the end of each
year for 5 years. The required rate of return for this project is 9
percent.
a. What is the project's payback period?
b. What is the project's
NPV?
c. What is the project's
PI?
d. What is the project's
IRR?
a. The project's payback period is
_____years. (Round to two decimal places.)
b. The project's NPV...
You are considering a project with an initial cash outlay of $75,000 and expected free cash...
You are considering a project with an initial cash outlay of
$75,000 and expected free cash flows of $22,000 at the end of
each year for 6 years. The required rate of return for this project
is 8 percent. What is the project's NPV? What is the project's
PI? What is the project's IRR?
You are considering a project with an initial cash outlay of $70,000 and expected free cash...
You are considering a project with an initial cash outlay of
$70,000
and expected free cash flows of $15,500
at the end of each year for
5
years. The required rate of return for this project is
5.5
percent.
a)
(5 pts)
What is the payback period of the
project?
b)
(5 pts)
What is the project’s NPV?
c)
(5 pts)
What is the project’s IRR?
d)
(5 pts)
If your firm has a required payback of
5years
and passing...
You are considering a project with an initial cash outlay of $87000 and expected cash flows...
You are considering a project with an initial cash outlay of
$87000 and expected cash flows of $23490 at the end of each year
for six years. The discount rate for this project is 10.1
percent.
a. What are the project's payback and discounted payback
periods?
b. What is the project's NPV?
c. What is the project's PI?
d. What is the project's IRR?
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