1A) What is the discount rate at which the following cash flows have a NPV of...

1A) 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 = -149,000
Year 1 cash flow = 39,000
Year 2 cash flow = 30,000
Year 3 cash flow = 40,000
Year 4 cash flow = 30,000
Year 5 cash flow = 41,000
Year 6 cash flow = 37,000

1B) What is the discounted payback period on Versace's proposed investment in a new line of fashion clothes? The expected cash flows appear below. Note that year 0 and year 1 cash flows are negative. (Answer in years; round to 2 decimals)

Year 0 cash flow = -95,000
Year 1 cash flow = -18,000
Year 2 cash flow = 50,000
Year 3 cash flow = 49,000
Year 4 cash flow = 54,000
Year 5 cash flow = 45,000
Year 6 cash flow = 46,000

Required rate of return = 14.00%

1C) 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 = -82,000
Year 1 cash flow = -41,000
Year 2 cash flow = 24,000
Year 3 cash flow = 40,000
Year 4 cash flow = 22,000
Year 5 cash flow = 26,000
Year 6 cash flow = 36,000
Year 7 cash flow = 39,000

ANSWER EACH PART (A,B,C)

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

1A) What is the discount rate at which the following cash flows have a NPV of...

1A) 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 = -158,000 Year 1 cash flow = 30,000 Year 2 cash flow = 36,000 Year 3 cash flow = 38,000 Year 4 cash flow = 39,000 Year 5 cash flow = 43,000 Year 6 cash flow = 42,000 1B) Your firm is evaluating a capital budgeting project. The estimated cash flows appear...

A. What is the NPV of the following cash flows if the required rate of return...

A. What is the NPV of the following cash flows if the required rate of return is 0.05? Year 0 1 2 3 4 CF -13868 2129 2503 694 3244 Enter the answer with 2 decimals (e.g. 1000.23). B. Winnebagel Corp. currently sells 39298 motor homes per year at $59840 each, and 17359 luxury motor coaches per year at $116566 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to...

What is the PV of the following cash flows, assuming a 5% discount rate?

What is the PV of the following cash flows, assuming a 5% discount rate?Initial investment – year 0: $(1,000,000)Year 1 cash flows: $100,000Year 2 cash flows: $100,000Year 3 cash flows: $100,000Year 4 -sale: $1,200,000

What is the present value of the following cash flows at a discount rate of 6%?...

What is the present value of the following cash flows at a discount rate of 6%? Years 1 – 5 $10,000 Years 6 – 10 $12,000 Years 11 – 20 $15,000 A. $109,896 B. $119,157 C. $141,544 D. $129,639 If a professor currently earns $80,000 per year and expects annual salary increases of 3%, approximately how long will the professor have to work before his/her annual salary reaches $500,000 per year? A. 62 years B. 49 years C. 101 years...

If the appropriate discount rate for the following cash flows is 13 percent, what is the...

If the appropriate discount rate for the following cash flows is 13 percent, what is the net present value of these cash flows assuming the initial cost is $700? Should you go through with this investment? YEAR CASH FLOW 0- $ -700 1- 100 2- 200 3- 300 4- 400

If the discount rate is 12%, what is the present value of the following cash flows:...

If the discount rate is 12%, what is the present value of the following cash flows: Year Cash Flow 1 $10,000 2 $11,000 3 $12,000 4 $13,000 5 $14,000 6-15 $15,000 each year a. $144,618 b. $90, 537 c. $127,923 d. $127,197

What is the net present value of the following cash flows if the relevant discount rate...

What is the net present value of the following cash flows if the relevant discount rate is 9 percent? Year Cash Flow 0 -11,520 1 81 2 650 3 880 4 2300 5 15,800 A) $1,300.54 B) $1,913.12 C) $1,679.22 D) $1,022.87 E) $1,506.54 45) SNR is considering a project with an initial cost of $50,000. The project will produce cash inflows of $10,000 a year for the first two years and $12,000 a year for the following three years....

What is the present value of the following set of cash flows when the discount rate...

What is the present value of the following set of cash flows when the discount rate is 11% p.a. compounded monthly? (Rounded to the nearest dollar). Year 1 $260 Year 2 $330 Year 3 $800 Year 4 $760 $1,605 $1,660 $1,565 $1,560 None of the above What is the future value of $6,000 invested for 8 years at an annually compounded interest rate of 11.5% p.a.? (Rounded to the nearest dollar). $14,980 $14,220 $14,333 $14,560 None of the above Melbourne Ltd...

The NPV of a series of cash flows is the following: At a 5% required rate...

The NPV of a series of cash flows is the following: At a 5% required rate of return, the NPV is $41,728 At a 10% required rate of return, the NPV is $24,708 At a 15% required rate of return, the NPV is $9,940 At a 20% required rate of return, the NPV is -$2,968 (note the negative sign) The IRR for the series of cash flows is in which range: Multiple Choice 0% to 5% Between 5% and 10%...

The following cash flows represent inflation adjusted (real) cash flows. If the nominal discount rate is...

The following cash flows represent inflation adjusted (real) cash flows. If the nominal discount rate is 20 percent and the inflation rate is 10 percent, which of the following is closest to the net present value of these cash flows? Year 0 1 2 3 4 CF (1,000) 591 537 488 444 Group of answer choices a. $362 b. $651 c. $682 d. $717

Subjects