Question
In: Finance
Dan is evaluating a project that will cost $900,000 but is expected to produce cashflows of...
Dan is evaluating a project that will cost $900,000 but is expected to produce cashflows of $225,000 per year for 10 years, with the first cash flow in one year. His cost of capital is 12% and his company's preferred payback period is three years or less.
a. What is the payback period of this project?
b. Should he take the project if he wants to increase the value of the company?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
You are evaluating a project that will cost $ 527,000, but is expected to produce cash...
You are evaluating a project that will cost $ 527,000, but is
expected to produce cash flows of $ 125 comma 000 per year for 10
years, with the first cash flow in one year. Your cost of capital
is 11 % and your company's preferred payback period is three years
or less.
a. What is the payback period of this project?
b. Should you take the project if you want to increase the value of
the company?
You are evaluating a project that will cost $497,000, but is expected to produce cash flows...
You are evaluating a project that will cost
$497,000,
but is expected to produce cash flows of
$123,000
per year for
10
years, with the first cash flow in one year. Your cost of
capital is
11.2%
and your company's preferred payback period is three years or
less.
a. What is the payback period of this project?
b. Should you take the project if you want to increase the value
of the company?
a. What is the payback period of...
You are evaluating a project that is expected to produce cash flows of $5,000 each year...
You are evaluating a project that is expected to produce cash
flows of $5,000 each year for the next 3 years and $7,000 each year
for the following 3 years. The IRR of this 6-year project is 12%.
If the firm’s WACC is 10%, what is the project’s NPV?
You are evaluating a project (initial investment is $41,000) that is expected to produce cash flows...
You are evaluating a project (initial investment is $41,000)
that is expected to produce cash flows of $5,000 each year for the
next ten years and $7,000 each year for the following ten years.
The IRR of this project is 12%. The firm’s WACC is 8%. What is the
project’s NPV?
a. Project X has an up-front cost of $20 million. The project is expected to produce...
a. Project X has an up-front cost of $20 million. The project is
expected to produce after-tax cash flows of $7.5 million at the end
of each of the next 3 years (t = 1, 2, and 3). The project has a
WACC=10%. What is the project’s NPV? b. However, if the company
waits a year they will find out more about the project’s expected
cash flows. If they wait a year, there is a 50% chance the market
will...
A project has an initial cost of $148,400 and is expected to produce cash inflows of...
A project has an initial cost of $148,400 and is expected to
produce cash inflows of $56,500, $69,540, and $97,867 over the next
three years, respectively. What is the discounted payback period if
the required rate of return is 10 percent?
A. 2.12 years B. 2.54 years C. 2.91 years D. 1.88 years
8. Project R has a cost of $ 10,000 and in expected to produce cash flows...
8. Project R has a cost of $ 10,000 and in expected to produce
cash flows per year of $ 4,000 for 3 years. Project S has a cost of
$20,000 and in expected to produce cash flows of $ 7,000 per year
for 4 years. Calculate the 2 projects' NPVs, IRRs, MIRRs, and PIs,
assuming a cost of capital of 11%. Which project should be selected
?
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of...
Project S has a cost of $10,000 and is expected to produce
benefits (cash flows) of $3,000 per year for 5 years. Project L
costs $25,000 and is expected to produce cash flows of $7,400 per
year for 5 years.
Calculate the two projects' NPVs, assuming a cost of capital of
12%. Do not round intermediate calculations. Round your answers to
the nearest cent.
Project S: $
Project L: $
Which project would be selected, assuming they are mutually
exclusive?...
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of...
Project S has a cost of $10,000 and is expected to produce
benefits (cash flows) of $4,000 per year for 5 years. Project L
costs $21,000 and is expected to produce cash flows of $8,000 per
year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs,
PIs, and Pay Back Period assuming a cost of capital of 12%. Which
project would be selected, assuming they are mutually exclusive,
using each ranking method? Which should actually be selected?
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of...
Project S has a cost
of $10,000 and is expected to produce benefits (cash flows) of
$3,000 per year for 5 years. Project L costs $25,000 and is
expected to produce cash flows of $7,400 per year for 5 years.
Calculate the two
projects' NPVs, assuming a cost of capital of 12%. Do not round
intermediate calculations. Round your answers to the nearest
cent.
Project S:
$
Project L:
$
Which project would be
selected, assuming they are mutually exclusive?...
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