Consider a project with a net investment of $40,000 and the following net cash flows: Annual...

Consider a project with a net investment of $40,000 and the following net cash flows: Annual Cash Flow Year 1 $25,000, Year 2 $36,000, Year 3 $8,000.

If the company's cost of capital is 5%, what would be the net present value of the project? (Using the financial calculator)

Expert Solution

CALCULATION OF THE NET PRESENT VALUE OF THE PROJECT

years	Cash Flow	PVF @ 5%	Present Value
0	$ -40,000	$ 1.0000	$ -40,000.00
1	$ 25,000	$ 0.9524	$ 23,809.52
2	$ 36,000	$ 0.9070	$ 32,653.06
3	$ 8,000	$ 0.8638	$ 6,910.70
	Total		$ 23,373.29

Net Present Value of the Project =			$ 23,373

jeff jeffy answered 3 years ago

Assume a $40,000 investment and the following cash flows for two alternatives. Year Investment A Investment...

Assume a $40,000 investment and the following cash flows for two alternatives. Year Investment A Investment B 1 $ 5,000 $ 25,000 2 12,000 10,000 3 15,000 20,000 4 10,000 — 5 10,000 — a. Calculate the payback for investment A and B. (Round your answers to 2 decimal places.) b. Which investment would you select under the payback method? Investment A Investment B c. If the inflow in the fifth year for Investment A was $10,000,000 instead of $10,000,...

1. Calculate the payback period for the following investment proposal. Investment Annual Net Cash Flows 1...

1. Calculate the payback period for the following investment proposal. Investment Annual Net Cash Flows 1 2 3 4 5 6 7 8 9 10 250 86 50 77 52 41 70 127 24 6 40 Payback Period: 2.A 4-year project has a projected cash inflow of $5,000 in the first year, $10,000 in the second year, $15,000 in the third year, and $20,000 in the fourth year. It will cost $19,000 to implement the project. The required rate of...

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

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

A project has an initial cost of $40,000, expected net cash flows of $9,000 per year...

A project has an initial cost of $40,000, expected net cash flows of $9,000 per year for 7 years, and a cost of capital of 11% Calculate in excel NPV, IRR, PB, DPB?

A company project has an initial cost of $40,000, expected net cash flows of $9,000 per...

A company project has an initial cost of $40,000, expected net cash flows of $9,000 per year for 7 years. The company has a target capital structure of 10% short term debt at an interest rate of 6.0%, 50% long term debt at an interest rate of 9.0%, and 40% equity with a cost of 18%. The company’s tax rate is 28%. a. What is the WACC to be used when evaluating this project? b. What is the projects NPV,...

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...

A) Consider the following investment project with a required return of 10 percent: Year Cash Flows...

A) Consider the following investment project with a required return of 10 percent: Year Cash Flows 0 -51652 1 14891 2 13845 3 13942 4 14886 What is the payback period for this project? (Round your answers to 2 decimal places. (e.g., 32.16)) B) An investment has an installed cost of $52572. The cash flows over the four-year life of the investment are projected to be $20399, $23594, $20582, and $11317. If the discount rate is zero, what is the...

A project is estimated to cost $463,565 and provide annual net cash flows of $115,000 for...

A project is estimated to cost $463,565 and provide annual net cash flows of $115,000 for nine years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968...

A project has the following cash flows: Year Cash Flow 0 $ 40,000 1 – 19,000...

A project has the following cash flows: Year Cash Flow 0 $ 40,000 1 – 19,000 2 – 30,000 What is the IRR for this project? What is the NPV of this project, if the required return is 11 percent? What is the NPV of the project if the required return is 0 percent? What is the NPV of the project if the required return is 22 percent?

Question