Question
In: Finance
Net present value. Independent projects Using a 14% cost of capital, calculate the net present value...
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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. |
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| 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 | 180,000 | 16,000 | 230,000 | 30,000 | ||||||||
| 6 | 4,000 | 200,000 | 15,000 | 230,000 | 0 | ||||||||
| 7 | 4,000 | 14,000 | 230,000 | 50,000 | |||||||||
| 8 | 4,000 | 13,000 | 230,000 | 60,000 | |||||||||
| 9 | 4,000 | 12,000 | 70,000 | ||||||||||
| 10 | 4,000 | 11,000 | |||||||||||
| Solution | |||||||||||||
| Project A | |||||||||||||
| Discount rate | 14% | ||||||||||||
| Number of years | 10 | ||||||||||||
| CF0 | -$26,000 | ||||||||||||
| CF1-10 | $4,000 | ||||||||||||
| PV of cash inflows | |||||||||||||
| NPV of project A | |||||||||||||
| The project will be | |||||||||||||
| Project B | |||||||||||||
| Discount rate | 14% | ||||||||||||
| CF0 | -$500,000 | ||||||||||||
| CF1 | $100,000 | ||||||||||||
| CF2 | $120,000 | ||||||||||||
| CF3 | $140,000 | ||||||||||||
| CF4 | $160,000 | ||||||||||||
| CF5 | $180,000 | ||||||||||||
| CF6 | $200,000 | ||||||||||||
| PV of cash inflows | |||||||||||||
| NPV of project B | |||||||||||||
| The project will be | |||||||||||||
| Project C | |||||||||||||
| Discount rate | 14% | ||||||||||||
| CF0 | -$170,000 | ||||||||||||
| CF1 | $20,000 | ||||||||||||
| CF2 | $19,000 | ||||||||||||
| CF3 | $18,000 | ||||||||||||
| CF4 | $17,000 | ||||||||||||
| CF5 | $16,000 | ||||||||||||
| CF6 | $15,000 | ||||||||||||
| CF7 | $14,000 | ||||||||||||
| CF8 | $13,000 | ||||||||||||
| CF9 | $12,000 | ||||||||||||
| CF10 | $11,000 | ||||||||||||
| PV of cash inflows | |||||||||||||
| NPV of project C | |||||||||||||
| The project will be | |||||||||||||
Solutions
Expert Solution
Accept projects with positive NPV
workings in excel as follows
jeff jeffy answered 1 year agoRelated Solutions
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 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...
Using a cost of capital of 13%, calculate the net present value for the project shown...
Using a cost of capital of 13%, calculate the net present value
for the project shown in the following table and indicate whether
it is acceptable, LOADING.... The net present value (NPV) of the
project is $
Initial investment -1,151,000
Year Cash inflows
1 84,000
2 136,000
3 192,000
4 255,000
5 318,000
6 382,000
7 277,000
8 100,000
9 42,000
10 25,000
Using a cost of capital of 11%, calculate the net present value for the project shown...
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 $−$1149
Year
(t)
Cash inflows
(CF Subscript tCFt)
in thousands
1
$8080
2
$130
3
$189
4
$256
5
$312
6
$376
7
$280
8
$102
9
$42
10
$20
The net present value (NPV) of the project is
$-75,817.60. (Round to the nearest cent.) Is the project
acceptable?
Using a cost of capital of 11%, calculate the net present value for the project shown...
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)
-$1149
Year
(t)
Cash inflows
(CF Subscript tCFt)
in thousands
1
$80
2
$130
3
$189
4
$256
5
$312
6
$376
7
$280
8
$102
9
$42
10
$20
Using a cost of capital of 15%, calculate the net present value for the project shown...
Using a cost of capital of 15%, calculate the net present value
for the project shown in the following table and indicate whether
it is acceptable
Initial investment $-1,145
Year Cash inflows
1 $76
2 $132
3 $185
4 $256
5 $316
6 $383
7 $277
8 $98
9 $43
10 $25
The net present value (NPV) of the project is $_____
Please show all work and what inputs would be in a financial
calculator
Evaluate the following projects, using the Net Present Value (NPV). Assume a cost of capital of...
Evaluate the following projects, using the Net Present Value
(NPV). Assume a cost of capital of 6%.
Project
A
Project B
Initial Cash Outflow
$200,000
$160,000
Year 1 Cash flow
69,000
80,000
Year 2 Cash flow
71,000
80,000
Year 3 Cash flow
85,000
50,000
Calculate the NPV for each project.
Which project would you accept according to the NPV?
Evaluate the following projects, using the net present value criteria. Assume a cost of capital of...
Evaluate the following projects, using the net present value
criteria. Assume a cost of capital of 9%.
Project M
Project N
Initial Cash Outflow
-$260,000
-$260,000
Year 1 Cash flow
19,000
185,000
Year 2 Cash flow
121,000
85,000
Year 3 Cash flow
185,000
55,000
a.
What are the NPVs for the projects and what do these numbers
tell you?
b.
If the projects are independent, which would you accept
according to the...
Using a discount rate of 14 percent, calculate the net present value (NPV) of the proposed investment.
Beacon Company is considering automating its production facility. The initial investment in automation would be $9.40 million, and the equipment has a useful life of 8 years with a residual value of $1,000,000. The company will use straight-line depreciation. Beacon could expect a production increase of 38,000 units per year and a reduction of 20 percent in the labor cost per unit.
Current (no automation)
Proposed (automation)
77,000 units
115,000 units
Production and sales volume
Per Unit
Total...
Donahue Industries Inc. wishes to evaluate three capital investment projects by using the net present value...
Donahue Industries Inc. wishes to evaluate three capital
investment projects by using the net present value method. Relevant
data related to the projects are summarized as follows:
Product Line
Expansion
Distribution
Facilities
Computer
Network
Amount to be invested
$790,052
$535,506
$310,018
Annual net cash flows:
Year 1
413,000
301,000
186,000
Year 2
384,000
271,000
128,000
Year 3
351,000
241,000
93,000
Present Value of $1 at Compound
Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2...
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