Question
In: Finance
A proposed project requires an initial cash outlay of $250,919 for equipment and an additional cash...
A proposed project requires an initial cash outlay of $250,919 for equipment and an additional cash outlay of $30,951 in year 1 to cover operating costs. During years 2 through 4, the project will generate cash inflows of $500,000 a year. What is the net present value of this project at a discount rate of 4 percent? Round your answer to the nearest whole dollar.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
PADICO is considering an investment project. The project requires an initial $5 million outlay for equipment...
PADICO is considering an investment project. The project
requires an initial $5 million outlay for equipment and machinery.
Sales are projected to be $2.5 million per year for the next four
years. The equipment will be fully depreciated straight-line by the
end of year 4. The cost of goods sold and operating expenses (not
including depreciation) are predicted to be 30% of sales. The
equipment can be sold for $500,000 at the end of year 4.Padico also
needs to add...
PADICO is considering an investment project. The project requires an initial $5 million outlay for equipment...
PADICO is considering an investment project. The project
requires an initial $5 million outlay for equipment and machinery.
Sales are projected to be $2.5 million per year for the next four
years. The equipment will be fully depreciated straight-line by the
end of year 4. The cost of goods sold and operating expenses (not
including depreciation) are predicted to be 30% of sales. The
equipment can be sold for $500,000 at the end of year 4.Padico also
needs to add...
PADICO is considering an investment project. The project requires an initial $5 million outlay for equipment...
PADICO is considering an investment project. The project
requires an initial $5 million outlay for equipment and machinery.
Sales are projected to be $2.5 million per year for the next four
years. The equipment will be fully depreciated straight-line by the
end of year 4. The cost of goods sold and operating expenses (not
including depreciation) are predicted to be 30% of sales. The
equipment can be sold for $500,000 at the end of year 4.Padico also
needs to add...
A project needs an initial outlay of $3000 for equipment and will net a cash flow...
A project needs an initial outlay of $3000 for equipment and
will net a cash flow of $250 for the next 15 years. At the end of
the 15th year, there is a Salvage Value of $1000 for the equipment.
What is the NPV of the project if the cost of capital is 15% p.a.
effective (to the nearest dollar)?
Select one:
a. -$945
b. -$1415
c. $2250
d. $1585
A project needs an initial outlay of $3000 for equipment and will net a cash flow...
A project needs an initial outlay of $3000 for equipment and
will net a cash flow of $300 for the next 12 years. At the end of
the 12th year, there is a Salvage Value of $1000 for the equipment.
What is the NPV of the project if the cost of capital is 12% p.a.
effective (to the nearest dollar)?
An investment project requires an initial outlay of $100,000, and is expected to generate annual cash...
An investment project requires an initial outlay of $100,000,
and is expected to generate annual cash inflows of $28,000 for the
next 5 years. The cost of capital is 12 percent. Determine the
internal rate of return for the project (to the nearest tenth of
one percent).
a.
12.0%
b.
12.6%
c.
3.6%
d.
12.4%
Project B: This project requires an initial investment of $20,000,000 in equipment which will require additional...
Project B: This project requires an initial investment of
$20,000,000 in equipment which will require additional expense of
$1,000,000 to install in the current facility. Consistent with
other projects, the equipment will be depreciated using the MACRS
Investment Class schedule. Once installed, the firm will need to
increase inventory by $6,000,000. The project will last 6 years,
but at the end of that period, the equipment will have no salvage
value. During the operational period of this project, the product...
Project S requires an initial outlay at t = 0 of $16,000, and its expected cash...
Project S requires an initial outlay at t = 0 of $16,000, and
its expected cash flows would be $6,000 per year for 5 years.
Mutually exclusive Project L requires an initial outlay at t = 0 of
$40,500, and its expected cash flows would be $12,100 per year for
5 years. If both projects have a WACC of 16%, which project would
you recommend?
Select the correct answer.
a. Project L, since the NPVL >
NPVS.
b. Both Projects...
Project L requires an initial outlay at t = 0 of $84,155, itsexpected cash inflows...
Project L requires an initial outlay at t = 0 of $84,155, its
expected cash inflows are $14,000 per year for 11 years, and its
WACC is 12%. What is the project's IRR? Round your answer to two
decimal places.%
Project S requires an initial outlay at t = 0 of $18,000, and its expected cash...
Project S requires an initial outlay at t = 0 of $18,000, and
its expected cash flows would be $4,000 per year for 5 years.
Mutually exclusive Project L requires an initial outlay at t = 0 of
$29,000, and its expected cash flows would be $14,900 per year for
5 years. If both projects have a WACC of 13%, which project would
you recommend? Select the correct answer.
a. Both Projects S and L, since both projects have IRR's...
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