Question
In: Finance
What is the net present value of a replacement project whose cash flows are -$875,000; $498,000;...
What is the net present value of a replacement project whose
cash flows are -$875,000; $498,000; $731,000; and $140,000 for
years 0 through 3, respectively? The firm has decided to assume
that the appropriate cost of capital is 16.8% p.a. (round to the
nearest dollar)
Select one:
a. $175067
b. $1925067
c. $24030
d. $265088
Solutions
Expert Solution
Correct Option is (a) $175067
explanations and calculations
Option (a) $ 175067 :- Correct ( Calculations are given in below image)
Option (b) $1925067 :- incorrect
option (c) $2430 :- incorrect
Option (d) $ 265088 :- incorrect.
Calculations of NPV are given in below images
jeff jeffy answered 1 year agoRelated Solutions
What is the net present value of a replacement project whose cash flows are -$927,000; $521,000;...
What is the net present value of a replacement project whose
cash flows are -$927,000; $521,000; $650,000; and $104,000 for
years 0 through 3, respectively? The firm has decided to assume
that the appropriate cost of capital is 14.5% p.a. (round to the
nearest dollar)
what is the net present value of a project with the following after tax cash flows...
what is the net present value of a project with the following after
tax cash flows using a discount rate of 10% year 0 45,000 year 1
14,000 year 2 14,000 year 3 10,000 year 4 10,000 year 5 8,000
would you accept the project? ehat is payback period? what is the
profitbility index?
22. Net Present Value A project has estimated annual net cash flows of $12,500 for one...
22. Net Present Value
A project has estimated annual net cash flows of $12,500 for one
years and is estimated to cost $42,500. Assume a minimum acceptable
rate of return of 10%. Use the Present Value of an Annuity
of $1 at Compound Interest table below.
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673
2.487
2.402
2.283
2.106...
Net Present Value A project has estimated annual net cash flows of $6,250 for seven years...
Net Present Value
A project has estimated annual net cash flows of $6,250 for
seven years and is estimated to cost $45,000. Assume a minimum
acceptable rate of return of 10%. Use the Present Value of
an Annuity of $1 at Compound Interest table below.
Present Value of an Annuity of $1 at
Compound Interest
Year
6%
10%
12%
15%
20%
1
0.943
0.909
0.893
0.870
0.833
2
1.833
1.736
1.690
1.626
1.528
3
2.673
2.487
2.402
2.283
2.106
4...
1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value...
1. Net present value (NPV)
Evaluating cash flows with the NPV method
The net present value (NPV) rule is considered one of the most
common and preferred criteria that generally lead to good
investment decisions.
Consider this case:
Suppose Cold Goose Metal Works Inc. is evaluating a proposed
capital budgeting project (project Alpha) that will require an
initial investment of $450,000. The project is expected to generate
the following net cash flows:
Year
Cash Flow
Year 1
$325,000
Year 2...
1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value...
1. Net present value (NPV)
Evaluating cash flows with the NPV method
The net present value (NPV) rule is considered one of the most
common and preferred criteria that generally lead to good
investment decisions.
Consider this case:
Suppose Happy Dog Soap Company is evaluating a proposed capital
budgeting project (project Beta) that will require an initial
investment of $3,000,000. The project is expected to generate the
following net cash flows:
Year
Cash Flow
Year 1
$300,000
Year 2
$475,000...
What is the net present value of a project that has an initial cash outflow of...
What is the net present value of a project that has an initial
cash outflow of $-13,000, at time 0, and the following cash flows
for years 1-4? The required return is 10.0%. DO NOT USE DOLLAR
SIGNS OR COMMAS IN YOUR ANSWER. ENTER YOUR ANSWER TO THE NEAREST
DOLLAR (e.g. 1250). Year Cash Flows 1 $3,950 2 $3,750 3 $5,900 4
$6,400
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....
Net present value. Quark Industries has a project with the following projected cash flows: Initial cost:...
Net present value. Quark Industries has a project with the
following projected cash flows: Initial cost: $210,000 Cash flow
year one: $25,000 Cash flow year two: $72,000 Cash flow year
three: $146,000 Cash flow year four: $146,000 a. Using a
discount rate of 11% for this project and the NPV model,
determine whether the company should accept or reject this project.
b. Should the company accept or reject it using a discount rate of
13%? c. Should the company accept...
Net present value. Quark Industries has a project with the following projected cash flows: Initial cost:...
Net present value. Quark Industries has a
project with the following projected cash flows:
Initial cost: $270,000
Cash flow year one: $24,000
Cash flow year two: $79,000
Cash flow year three: $155,000
Cash flow year four: $155,000
a. Using a discount rate of 10% for this
project and the NPV model, determine whether the company should
accept or reject this project.
b. Should the company accept or reject it using
a discount rate of 13%?
c. Should the company accept...
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