Question
In: Finance
The following project is under consideration by Riviera Holdings Corp. Riviera's requires a 15% rate of...
The following project is under consideration by Riviera Holdings Corp. Riviera's requires a 15% rate of return on projects of this nature.
CF0: -$17,000,000
CF1: +$10,000,000
CF2: +$8,000,000
CF3: +$4,000,000
CF4: +$6,000,000
What is the net present value of the project?
What is the profitability index of the project?
Solutions
Expert Solution
Ans net present value of the project: $ 3805385.92
profitability index of the project: $ 1.22
| Year | Project Cash Flows (i) | DF@ 15% | DF@ 15% (ii) | PV of Project ( (i) * (ii) ) |
| 1 | 10000000 | 1/((1+15%)^1) | 0.869565 | 86,95,652.17 |
| 2 | 8000000 | 1/((1+15%)^2) | 0.756144 | 60,49,149.34 |
| 3 | 4000000 | 1/((1+15%)^3) | 0.657516 | 26,30,064.93 |
| 4 | 6000000 | 1/((1+15%)^4) | 0.571753 | 34,30,519.47 |
| PV | 2,08,05,385.92 | |||
| NPV = | Present value of cash inflows - cash outflows | |||
| 20805385.92 -17000000 | ||||
| 3805385.92 | ||||
| Total of PV of Cash Inflows | 20805385.92 | |||
| Cash Outflows | 17000000 | |||
| Profitability Index = | 1.22 | |||
| Present value of cash Inflow / Initial Investment (Cash Outflows) | (20805385.92 /17000000) |
jeff jeffy answered 1 year agoRelated Solutions
The following project is under consideration by Riviera Holdings Corp. Riviera's requires a 15% rate of...
The following project is under consideration by Riviera Holdings
Corp. Riviera's requires a 15% rate of return on projects of this
nature.
CF0: -$17,000,000
CF1: +$10,000,000
CF2: +$8,000,000
CF3: +$4,000,000
CF4: +$6,000,000
What is the net present value of the project?
What is the profitability index of the project?
The following projects are under consideration by Smith's Food Markets, Inc. Smith's requires a 14% rate...
The following projects are under consideration by Smith's Food
Markets, Inc. Smith's requires a 14% rate of return on projects of
this nature.
Project A: CF0 = -$90,000;
CF1-CF6 = +$25,000
Project B: CF0 = -$200,000;
CF1-CF3 = +$90,000
What is the Profitability Index of project A?
Group of answer choices
1.08
1.35
1.50
1.67
1.04
The following projects are under consideration by Smith's Food Markets, Inc. Smith's requires a 14% rate...
The following projects are under consideration by Smith's Food
Markets, Inc. Smith's requires a 14% rate of return on projects of
this nature.
Project A: CF0 = -$90,000;
CF1-CF6 = +$25,000
Project B: CF0 = -$200,000;
CF1-CF3 = +$90,000
What is the NPV of project B?
Group of answer choices
$7,217
$70,000
$8,947
$16,164
$60,000
What is the IRR of project B?
Group of answer choices
22.50%
27.78%
16.88%
45.00%
16.65%
The following projects are under consideration by Smith's Food Markets, Inc. Smith's requires a 14% rate...
The following projects are under consideration by Smith's Food
Markets, Inc. Smith's requires a 14% rate of return on projects of
this nature.
Project A: CF0 = -$90,000;
CF1-CF6 = +$25,000
Project B: CF0 = -$200,000;
CF1-CF3 = +$90,000
What is the Profitability Index of project A?
Group of answer choices
1.08
1.35
1.50
1.67
1.04
A project under consideration has an internal rate of return of 13% and a beta of...
A project under consideration has an internal rate of return of
13% and a beta of 0.8. The risk-free rate is 3%, and the expected
rate of return on the market portfolio is 13%.
a. What is the required rate of return on the
project? (Do not round intermediate calculations. Enter
your answer as a whole percent.)
b. Should the project be accepted?
c. What is the required rate of return on the
project if its beta is 1.80? (Do...
A project under consideration has an internal rate of return of 13% and a beta of...
A project under consideration has an internal rate of return of
13% and a beta of 0.5. The risk-free rate is 3%, and the expected
rate of return on the market portfolio is 13%.
a-1.
Calculate the required return.
Required return
%
a-2.
Should the project be accepted?
Yes
No
b-1.
Calculate the required return if its beta is 1.5.
Required return
%
b-2.
Should the project be accepted?
Yes
No
A project under consideration has an internal rate of return of 13% and a beta of...
A project under consideration has an internal rate of return of
13% and a beta of 0.4. The risk-free rate is 3%, and the expected
rate of return on the market portfolio is 13%.
a. What is the required rate of return on the
project? (Do not round intermediate calculations. Enter
your answer as a whole percent.)
b. Should the project be accepted?
Yes
No
c. What is the required rate of return on the
project if its beta is...
Kermit Kite Co. has 2 Projects under consideration- PROJECT C and PROJECT D with the following...
Kermit Kite Co. has 2 Projects under consideration- PROJECT C
and PROJECT D with the following cashflows.
PROJECT C PROJECT D
Year 0 (800,000) Year 0 (360,000)
Year 1 450,000 Year 1 200,000
Year 2 350,000 Year 2 265,000
Year 3 215,000
The firm's cost of capital is 12%.
Calculate the EAA for each project. Which is the preferred
project under EAA and why?
1A) It is estimated that a poultry project under consideration by the ministry of food and...
1A) It is estimated that a poultry project under consideration
by the ministry of food and agriculture of the Republic of Ghana
will cost GHȻ 200 million. This is expected to generate a net
benefit of GHȻ 160 Million, GHȻ 100 , GHȻ 200, and GHȻ 360 million
in the first ,second , third and fourth years respectively with a
social rate of discount of 20%.
Required:
a) Calculate the Payback Period for this Project
b) What does this...
Akerman Techonology Corp. is preparing its SFP at 31 December 20X5. The following items are under consideration:
Akerman Techonology Corp. is preparing its SFP at 31 December 20X5. The following items are under consideration:a. Rent received in advance for the first quarter of 20X6, $20,000.b. Note payable, long term, $100,000. This note was issued on 1 July 20X5 and will be paid in five equal instalments. The first instalment, $20,000, will be paid 1 January 20X6. Interest will accrue at the rate of 8% per annum.c. $400,000 bonds payable bearing interest of 8% per annum, maturing 31...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Allocation: Fixed and Variable Costs, Budgeted Fixed and Variable Costs Biotechtron, Inc., has two research laboratories...
- Do you think that there is still institutionalized racial discrimination in the United States today and...
- Computer Security Consider a desktop publishing system used to produce documents for various organizations. a. Give...
- Review the discussion question and answer below. Do you agree with the answer? why or why...
- For the assignment you have to do two thing Passing arguments when running the jar or...
- Explain how biology, culture, and their interaction shape sex differences.
- Write a program that computes the tax and tip on a restaurant bill for a patron...
ADVERTISEMENT