Question
In: Finance
10a- Your firm is evaluating a capital budgeting project. The estimated cash flows appear below. The...
10a- Your firm is evaluating a capital budgeting project. The
estimated cash flows appear below. The board of directors wants to
know the expected impact on shareholder wealth. Knowing that the
estimated impact on shareholder wealth equates to net present value
(NPV), you use your handy calculator to compute the value. What is
the project's NPV? Assume that the cash flows occur at the end of
each year. The discount rate (i.e., required rate of return, hurdle
rate) is 14.4%. (Round to nearest penny)
| Year 0 cash flow | -133,000 |
| Year 1 cash flow | 53,000 |
| Year 2 cash flow | 40,000 |
| Year 3 cash flow | 45,000 |
| Year 4 cash flow | 42,000 |
| Year 5 cash flow | 30,000 |
Answer:
10b- What is the discount rate at which the
following cash flows have a NPV of $0? Answer in %, rounding to 2
decimals.
Year 0 cash flow = -132,000
Year 1 cash flow = 33,000
Year 2 cash flow = 37,000
Year 3 cash flow = 33,000
Year 4 cash flow = 39,000
Year 5 cash flow = 42,000
Year 6 cash flow = 31,000
Answer:
10c- US Robotics is evaluating a new product
line. The CFO asks for an estimate of number of years to recover
the initial investment, ignoring the time value of money. You
realize that this is the payback period. The estimated cash flows
from the new product line appear below. (Answer in years, round to
2 places)
Year 0 cash flow = -83,000
Year 1 cash flow = -41,000
Year 2 cash flow = 31,000
Year 3 cash flow = 33,000
Year 4 cash flow = 44,000
Year 5 cash flow = 37,000
Year 6 cash flow = 38,000
Year 7 cash flow = 34,000
Answer:
Solutions
jeff jeffy answered 2 years agoRelated Solutions
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