caclulate the NPV for the project that has an initial investment of $20,000 with expected after-tax...

caclulate the NPV for the project that has an initial investment of $20,000 with expected after-tax operating cash flows of $125,000 per year for each of the next 3 years. However, in preparation for its termination at the end of year 3, an additional investment of $350,000 must be made at the end of Year 2. What is the NPV? the cost of capital is 12%. Please show all calculations in excel!

Expert Solution

NPV for the project is calculated as follows,

Net Present Value = Present value of Cash inflows - Present value of Cash outflows

Year	Cash flow	PV factor @12%	PV of cash flows
-	(20,000)	1.00	(20,000.00)
1	125,000	0.89	111,607.14
2	(225,000)	0.80	(179,368.62)
3	125,000	0.71	88,972.53
NPV @12%	1,211.05

Cash flows of 2 nd year = Cash inflows-Cash outflows

=125,000-350,000

=(225,000)

jeff jeffy answered 1 year ago

1 A project has an initial cost of $ 320,000, expected after-tax cash inflows of $...

1 A project has an initial cost of $ 320,000, expected after-tax cash inflows of $ 75,000 per year for 8 years, a net salvage value of $ 30,000, and a cost of capital of 11%. a) What is the project's net present value? b) What is the project's profitability index? c) What is the project's internal rate of return? d) What is the project's modified internal rate of return (assume the investment rate to be equal to the cost...

1. Calculate the NPV of a project that has an initial investment of $700,000.00 at an...

1. Calculate the NPV of a project that has an initial investment of $700,000.00 at an IRR of 15% with inflows of $200,000.00 each year for the next five years. Will this project be acceptable or rejected and why? 2. A company wants to find what the Net Present Value of a project is: if the initial investment is $500,000.00 at an internal rate of return of 20% with potential inflows of $250,000.00; $200,000.00; $350,000.00; $200,000.00; $275,000.00 during the next five...

What is the NPV of a project that has an initial investment of $7,300, with end...

What is the NPV of a project that has an initial investment of $7,300, with end of year cash flows as follows: year 1: $1,500 year 2: $2,500 year 3: $3,000 year 4: $2,500 year 5: $1,500 The interest rate is 8%

A project requires an investment of 10500 today and it is expected to generate after-tax cash...

A project requires an investment of 10500 today and it is expected to generate after-tax cash flows of 2,500 per year for the next 6 years. The company’s weighted average cost of capital is 12.2% per year. What is the projects net present value?

What is the NPV for a project with the following characteristics? Initial investment is $1,700,000 Initial...

What is the NPV for a project with the following characteristics? Initial investment is $1,700,000 Initial investment is depreciated to $0 over its 10 year life Project generates incremental after-tax cash flows (OCF) of $325,000 per year over the projects life Project requires a net working capital (NWC) investment today of $40,000, which is recovered at the end of the project Assets purchased with the initial investment are expected to have a salvage value of $62,000 at the end of...

A two-year project has been evaluated and has an NPV on an after tax basis of...

A two-year project has been evaluated and has an NPV on an after tax basis of -$2000. On reviewing the analysis the Finance Manager found that depreciation had been omitted from the tax analysis. The allowable depreciation for tax purposes is $5000 for each year. Using a tax rate of 30% and and a discount rate after tax of 12% pa, determine the correct NPV for the project (to the nearest dollar). Can someone help me to solve this and...

What is the NPV of project A? The project would require an initial investment in equipment...

What is the NPV of project A? The project would require an initial investment in equipment of 60,000 dollars and would last for either 3 years or 4 years (the date when the project ends will not be known until it happens and that will be when the equipment stops working in either 3 years from today or 4 years from today). Annual operating cash flows of 18,600 dollars per year are expected each year until the project ends in...

Project Z has an initial investment of $54,769.00 . The project is expected to have cash...

Project Z has an initial investment of $54,769.00 . The project is expected to have cash inflows of $22,136.00 at the end of each year for the next 16.0 years. The corporation has a WACC of 12.76%. Calculate the NPV for project Z.

Project Z has an initial investment of $73,431.00 . The project is expected to have cash...

Project Z has an initial investment of $73,431.00 . The project is expected to have cash inflows of $29,499.00 at the end of each year for the next 13.0 years. The corporation has a WACC of 11.55%. Calculate the NPV for project Z.

1. Me Online, Inc. is considering a project that has an initial after-tax outlay or after-tax...

1. Me Online, Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $220,000. The respective future cash inflows from its four-year project for years 1 through 4 are: $50,000, $60,000, $70,000 and $80,000. Sportswear Online uses the net present value method and has a discount rate of 11%. Will Sportswear Online accept the project? a. Me Online rejects the project because the NPV is about -$22,375.73 b. Me Online accepts the project because the...

Question