Question
In: Finance
Calculate the Net Present Value of the cash flows depicted in the table below using a...
Calculate the Net Present Value of the cash flows depicted in the table below using a cost of capital of {r81d}percent.
| year | Cash Flow |
|---|---|
| 0 | -60 |
| 1 | 40 |
| 2 | 40 |
| 3 | 0 |
Solutions
Expert Solution
| Statement showing Cash flows | ||||
| Particulars | Time | PVf 8% | Amount | PV |
| Cash Outflows | - | 1.00 | (60.00) | (60.00) |
| PV of Cash outflows = PVCO | (60.00) | |||
| Cash inflows | 1.00 | 0.9259 | 40.00 | 37.04 |
| Cash inflows | 2.00 | 0.8573 | 40.00 | 34.29 |
| Cash inflows | 3.00 | 0.7938 | - | - |
| PV of Cash Inflows =PVCI | 71.33 | |||
| NPV= PVCI - PVCO | 11.33 | |||
jeff jeffy answered 3 years agoRelated Solutions
Determine the net present worth (NPW) of the cash flows given in table below for an...
Determine the net present worth (NPW) of the cash flows given in
table below for an investment opportunity being presented to a
company. MARR =10%. Year 0 1-10 11-15 16-25 26-30 Cash Flow -$100K
10K 20K -5K 30K
Calculate the net present value at year 0 for the following cash flows and interest rates...
Calculate the net present value at year 0 for the following cash
flows and interest rates compounded semi-annually (rounded $ to two
places after the decimal). The year 0 cash flow is $373, the year 1
cash flow is $200, and the year 2 cash flow is $-147. The interest
rate for the first period (year 0 to 1) is 3% and the interest rate
for the second period (year 1 to 2) is 4.5%.
Net present value Using a cost of capital of 11%, calculate the net present value for...
Net present value Using a cost of capital of
11%, calculate the net present value for the project
shown in the following table and indicate whether it is
acceptable,
Initial investment
(CF
0CF0)
negative 1 comma 143 comma 000−1,143,000
Year
(t)
Cash inflows
(CF Subscript
tCFt)
1
$81,000
2
$138,000
3
$193,000
4
$258,000
5
$311,000
6
$377,000
7
$270,000
8
$98,000
9
$45,000
10
$29,000
The net present value (NPV) of the project is _____$ (Round
to the nearest...
1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value...
1. Net present value (NPV)
Evaluating cash flows with the NPV method
The net present value (NPV) rule is considered one of the most
common and preferred criteria that generally lead to good
investment decisions.
Consider this case:
Suppose Cold Goose Metal Works Inc. is evaluating a proposed
capital budgeting project (project Alpha) that will require an
initial investment of $450,000. The project is expected to generate
the following net cash flows:
Year
Cash Flow
Year 1
$325,000
Year 2...
1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value...
1. Net present value (NPV)
Evaluating cash flows with the NPV method
The net present value (NPV) rule is considered one of the most
common and preferred criteria that generally lead to good
investment decisions.
Consider this case:
Suppose Happy Dog Soap Company is evaluating a proposed capital
budgeting project (project Beta) that will require an initial
investment of $3,000,000. The project is expected to generate the
following net cash flows:
Year
Cash Flow
Year 1
$300,000
Year 2
$475,000...
1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value...
1. Net present value (NPV)
Evaluating cash flows with the NPV method
The net present value (NPV) rule is considered one of the most
common and preferred criteria that generally lead to good
investment decisions.
Consider this case:
Suppose Celestial Crane Cosmetics is evaluating a proposed
capital budgeting project (project Beta) that will require an
initial investment of $2,225,000. The project is expected to
generate the following net cash flows:
Year
Cash Flow
Year 1
$300,000
Year 2
$400,000
Year...
Consider the following investment that has these cash flows and net present value. Using the above...
Consider the following investment that has these cash flows and
net present value. Using the above information, what is the break
even cash flow for year 0, year 1, and what is the pre-discounted
value?
Year
0
1
2
3
Chase flow
-$16,775
$4575
$5500
$9180
Discount rate
6.50%
PV factor
1
.93897
.88166
.82785
NPV:
-$30.44
Net present value. Independent projects Using a 14% cost of capital, calculate the net present value...
Net present value. Independent projects Using a 14% cost of
capital, calculate the net present value for each of the
independent projects shown in the following table, and indicate
whether each is acceptable.
Project A
Project B
Project C
Project D
Project E
Initial investment
$26,000
$500,000
$170,000
$950,000
$80,000
Year
Cash inflows
1
$4,000
$100,000
$20,000
$230,000
$ 0
2
4,000
120,000
19,000
230,000
0
3
4,000
140,000
18,000
230,000
0
4
4,000
160,000
17,000
230,000
20,000
5
4,000...
Net present value. Independent projects Using a 14% cost of capital, calculate the net present value...
Net present value. Independent projects Using a 14% cost of
capital, calculate the net present value for each of the
independent projects shown in the following table, and indicate
whether each is acceptable.
Project A
Project B
Project C
Project D
Project E
Initial investment
$26,000
$500,000
$170,000
$950,000
$80,000
Year
Cash inflows
1
$4,000
$100,000
$20,000
$230,000
$ 0
2
4,000
120,000
19,000
230,000
0
3
4,000
140,000
18,000
230,000
0
4
4,000
160,000
17,000
230,000
20,000
5
4,000...
Given the following cash flows and a discount rate of 9.5%, the net present value is...
Given the following cash flows and a discount rate of 9.5%, the
net present value is closest to:
CF0 $ (27.50)
CF1 $ 8.75
CF2 $ 11.30
CF3 $ 14.90
St. Lawrence Ventures had cash flow from assets in 2014 of
$1,875 (all values in thousands). The company paid interest expense
of $370 and the cash flow to shareholders was $1,425. St.
Lawrence:
ct an answer and submit. For keyboard navigation, use the
up/down arrow keys to select an answer....
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