Question

In: Finance

NPV and IRR: Equal Annual Net Cash Inflows Apache Junction Company is evaluating a capital expenditure...

NPV and IRR:
Equal Annual Net Cash Inflows
Apache Junction Company is evaluating a capital expenditure proposal that requires an initial investment of $44,190, has predicted cash inflows of $9,000 per year for 13 years, and has no salvage value.

(a) Using a discount rate of 16 percent, determine the net present value of the investment proposal. (Round to the nearest whole number.)
$Answer

(b) Determine the proposal's internal rate of return.
Answer %

(c) What discount rate would produce a net present value of zero?
Answer %

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

NPV and IRR: Unequal Annual Net Cash Inflows Assume that Goodrich Petroleum Corporation is evaluating a...
NPV and IRR: Unequal Annual Net Cash Inflows Assume that Goodrich Petroleum Corporation is evaluating a capital expenditure proposal that has the following predicted cash flows: Initial Investment $(48,660) Operation Year 1 16,000 Year 2 26,000 Year 3 21,000 Salvage 0 a. Using a discount rate of 10 percent, determine the net present value of the investment proposal. $Answer (Round answer to the nearest whole number.) b. Determine the proposal's internal rate of return. (Refer to Appendix 12B if you...
(Organizing cash flows, NPV, IRR) A company is evaluating the purchase of Machine X to improve...
(Organizing cash flows, NPV, IRR) A company is evaluating the purchase of Machine X to improve product quality. The new machine would cost $1,000,000 and would be depreciated for tax purposes using the straight-line method over an estimated seven-year life to its expected salvage value of $125,000. The new machine would require an addition of $100,000 to working capital. In each year of Machine X’s life, the company would increase its pretax receipts by $400,000. The company has an 11%...
1. Capital expenditure for a complete new investment is $ 120,000,000; the expected annual net cash...
1. Capital expenditure for a complete new investment is $ 120,000,000; the expected annual net cash flows generated from investment are given below. Suppose that the company’s cost of capital is 10%, calculate and comment the payback period of the project. Years Cash flows ($000) (DF 10%) 1 40,000 0.909 2 42,000 0.826 3 50,000 0.751 4 52,000 0.683 5 55,000 0.621 SV 60,000 0.565
The NPV and payback period Suppose you are evaluating a project with the cash inflows shown...
The NPV and payback period Suppose you are evaluating a project with the cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. The project's annual cash flows are: Year Cash Flow Year 1 $400,000 Year 2 600,000 Year 3 500,000 Year 4 475,000 If the project’s desired rate...
A company estimates the following net cash inflows and outflows for a capital investment project that...
A company estimates the following net cash inflows and outflows for a capital investment project that is currently under consideration. year Cash flow 0 (575,000) 1 45,800 2 99,000 3 104,300 4 118,700 5 130,400 6 129,000 7 116,500 8 77,200 9 55,000 10 12,500 Calculate the ARR and NPV of the project.
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...
LTC and NPV are two methods for evaluating a long term capital expenditure. Please describe a...
LTC and NPV are two methods for evaluating a long term capital expenditure. Please describe a situation where it would be better to use LTC instead of NPV, and then vice versa. Please be specific with the situations
Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one...
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 Alpha) that will require an initial investment of $600,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $350,000 Year 2 $475,000 Year 3 $425,000 Year 4...
IRR A project has an initial cost of $55,000, expected net cash inflows of $11,000 per...
IRR A project has an initial cost of $55,000, expected net cash inflows of $11,000 per year for 10 years, and a cost of capital of 14%. What is the project's IRR? Round your answer to two decimal places.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT