Question
In: Finance
Suppose a company has proposed a new 4-year project. The project has an initial outlay of...
Suppose a company has proposed a new 4-year project. The project has an initial outlay of $25,000 and has expected cash flows of $7,000 in year 1, $9,000 in year 2, $12,000 in year 3, and $13,000 in year 4. The required rate of return is 11% for projects at this company. What is the net present value for this project? (Answer to the nearest dollar.)
Solutions
Expert Solution
Ans $ 5949
| Year | Project Cash Flows (i) | DF@ 11% | DF@ 11% (ii) | PV of Project ( (i) * (ii) ) |
| 0 | -25000 | 1 | 1 | (25,000) |
| 1 | 7000 | 1/((1+11%)^1) | 0.900901 | 6,306 |
| 2 | 9000 | 1/((1+11%)^2) | 0.811622 | 7,305 |
| 3 | 12000 | 1/((1+11%)^3) | 0.731191 | 8,774 |
| 4 | 13000 | 1/((1+11%)^4) | 0.658731 | 8,564 |
| NPV | 5,949 |
jeff jeffy answered 1 year agoRelated Solutions
Suppose a company has proposed a new 4-year project. The project has an initial outlay of...
Suppose a company has proposed a new 4-year project. The project
has an initial outlay of $17,000 and has expected cash flows of
$8,000 in year 1, $9,000 in year 2, $10,000 in year 3, and $14,000
in year 4. The required rate of return is 15% for projects at this
company. What is the profitability index for this project? (Answer
to the nearest hundredth, e.g. 1.23)
Suppose a company has proposed a new 4-year project. The project has an initial outlay of...
Suppose a company has proposed a new 4-year project. The project
has an initial outlay of $29,000 and has expected cash flows of
$7,000 in year 1, $8,000 in year 2, $11,000 in year 3, and $13,000
in year 4. The required rate of return is 14% for projects at this
company. What is the profitability index for this project? (Answer
to the nearest hundredth, e.g. 1.23)
10. Suppose a company has proposed a new 4-year project. The project has an initial outlay...
10. Suppose a company has proposed a new 4-year project. The
project has an initial outlay of $60,000 and has expected cash
flows of $18,000 in year 1, $23,000 in year 2, $26,000 in year 3,
and $34,000 in year 4. The required rate of return is 14% for
projects at this company. What is the Payback for this project?
(Answer to the nearest tenth of a year, e.g. 1.2)
11. Suppose a company has proposed a new 4-year project....
A company is considering a 6-year project that requires an initial outlay of $23,000. The project...
A company is considering a 6-year project that requires an
initial outlay of $23,000. The project engineer has estimated that
the operating cash flows will be $4,000 in year 1, $6,000 in year
2, $7,000 in year 3, $7,000 in year 4, $7,000 in year 5, and $8,000
in year 6. At the end of the project, the equipment will be fully
depreciated, classified as 5-year property under MACRS. The project
engineer believes the equipment can be sold for $5,000...
A company is considering a 6-year project that requires an initial outlay of $30,000. The project...
A company is considering a 6-year project that requires an
initial outlay of $30,000. The project engineer has estimated that
the operating cash flows will be $3,000 in year 1, $6,000 in year
2, $7,000 in year 3, $7,000 in year 4, $7,000 in year 5, and $8,000
in year 6. At the end of the project, the equipment will be fully
depreciated, classified as 5-year property under MACRS. The project
engineer believes the equipment can be sold for $6,000...
Your company is considering a project with an initial outlay of $1,000 in year zero and...
Your company is considering a project with an initial outlay of
$1,000 in year zero and the following cash flows over the next 4
years:
Year
Cash flow
1
200
2
300
3
400
4
500
Assuming cost of capital is 11%:
Use Scenario manager to calculate Expected NPV
(format your answer to 2 decimal
places) given the following three
scenarios and their probabilities of occurrence:
Scenario
Cost of capital
Probability
Best case scenario
9%
25%
Most likely case Scenario...
Your company is considering a project with an initial outlay of $10,000 in year zero and...
Your company is considering a project with an initial
outlay of $10,000 in year zero and the following cash
flows over the next 4 years:
Year
Cash flow
1
2,000
2
3,000
3
4,000
4
5,000
Assuming cost of capital is 11%:
1) The project's Modified Internal Rate of
Return is:
12.24%
12.50%
0%
11%
13.00%
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.
1) A company invests in a new project that requires an initial capital outlay of $852790....
1) A company invests in a new project that requires an initial
capital outlay of $852790. The project will generate annual net
cash flows of $145612 over a period of 8 years. The after-tax cost
of capital is 9%. In addition, a working capital outlay of $94620
will be required. This working capital outlay will be recovered at
the end of the project’s life.
What is the net present value of the project?
Select one:
a. $-141474
b. $-93987
c....
Payback Period An organization’s initial outlay for a proposed project is $650,000. Use the table below...
Payback Period
An organization’s initial outlay for a
proposed project is $650,000. Use the table below to calculate the
payback period for this project.
Free Cash Flows
Year
Amount
Year
Amount
1
$95,000.00
6
$620,000.00
2
$46,000.00
7
$100,000.00
3
$167,000.00
8
$100,000.00
4
$185,000.00
9
$100,000.00
5
$90,000.00
10
$100,000.00
The organization’s objectives indicate
a corporate payback period of 7 years or less.
Would the company be able to meet the
cost of the project according to its stated...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Question #1 C4H10O with a butanol combustion cycle (formation enthalpy-332,000 kJ / kmol) 25 per cent...
- Suppose a survey revealed that 19% of 494 respondents said they had in the past sold...
- Topic: Choose a company which are you are starting, and a main product or service that...
- 4. Why did the United States and the Soviet Union find themselves in a “Cold War”...
- The Facts: Ann and Bill decided to start a coffee shop. They agreed Bill would provide...
- MARGI sells different types of wine. Customers place orders to the most popular “Summer Wine” at...
- A firm's bonds have a maturity of 8 years with a $1,000 face value, have an...
ADVERTISEMENT