Vail Recreation is analyzing a project that will generate cash flows of $10,650, $11,600, $14,700, and...

Vail Recreation is analyzing a project that will generate cash flows of $10,650, $11,600, $14,700, and $9,200 over each of the next four years, respectively. The profitability index (PI) is the way they analyze their investment projects. The appropriate required return for a project like this is 9 percent. This project has a PI of 1.347. Based on this information provided, determine the Time 0 cost for this project.

Expert Solution

Ans $ 27767.44

Year	Project Cash Flows (i)	DF@ 9%	DF@ 9% (ii)	PV of Project ( (i) * (ii) )

1	10650	1/((1+9%)^1)	0.917431	9,770.64
2	11600	1/((1+9%)^2)	0.841680	9,763.49
3	14700	1/((1+9%)^3)	0.772183	11,351.10
4	9200	1/((1+9%)^4)	0.708425	6,517.51
		NPV	37,402.74

	PI =	Present value of cash inflows / Cash outflows
	1.347 =	37402.74 / Cash outflows
	Cash Outflows =	37402.74 / 1.347
	Cash Outflows =	27767.44

jeff jeffy answered 1 year ago

TL Lumber is evaluating a project with cash flows of −$12,800, $7,400, $11,600, and −$3,200 for...

TL Lumber is evaluating a project with cash flows of −$12,800, $7,400, $11,600, and −$3,200 for Years 0 to 3, respectively. Given an interest rate of 8 percent, what is the MIRR using the discounted approach? 13.25 percent 14.08 percent 15.40 percent 14.36 percent 19.23 percent

A project that provides annual cash flows of $14,700 for 9 years costs $81,395 today. A)...

A project that provides annual cash flows of $14,700 for 9 years costs $81,395 today. A) If the required return is 4 percent, what is the NPV for this project? B)Determine the IRR for this project.

A project has an initial outlay of $3,640. The project will generate cash flows of $4,565...

A project has an initial outlay of $3,640. The project will generate cash flows of $4,565 in Years 1-5. What is the Equivalent Annual Annuity (EAA) of this project? Assume an interest rate of 11%. Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. If your answer is negative, enter your answer as a negative number rounded off to two decimal points.

A project has an initial outlay of $2,378. The project will generate annual cash flows of...

A project has an initial outlay of $2,378. The project will generate annual cash flows of $660 over the 4-year life of the project and terminal cash flows of $202 in the last year of the project. If the required rate of return on the project is 13%, what is the net present value (NPV) of the project? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.

Corporation has a project with the initial cost of $150. It will generate the cash flows...

Corporation has a project with the initial cost of $150. It will generate the cash flows of $50, $100, and $150 in years 1, 2 and 3, respectively, which is the internal rate of return (IRR) of project?

A project requires $1000 to be invested today, and is expects to generate cash flows in...

A project requires $1000 to be invested today, and is expects to generate cash flows in the future years: CF1=$500, CF2=$400, CF3=$200. What is the REGULAR payback period of this project? a) 2.5 years b) 3 years c) 1.25 years d) 0.5 years e) Never pay back the cost

a project with an initial cost of $73,600 is expected to generate annual cash flows of...

a project with an initial cost of $73,600 is expected to generate annual cash flows of $16,360 for the next 8 years. what is the projects internal rate of retu

A company is considering a project that costs $150,000 and is expected to generate cash flows...

A company is considering a project that costs $150,000 and is expected to generate cash flows of $50,000, $52,000, $53,000 in the coming three years. Which of the following is correct? A. The project must have a postive net present value. B. The project must be accepted by the payback rule. C. The project must be accepted by the discounted payback rule. D The project must have an internal rate of return lower than 2% E. None of the above....

19) A firm is considering a project that is expected to generate annual cash flows of...

19) A firm is considering a project that is expected to generate annual cash flows of $24,000 for 15 years. The project requires an initial investment of $247,103.44. The cost of capital is 8.13%. What is the IRR of the project?

a project with an initial cost of $29,350 is expected to generate cash flows of $7,200,...

a project with an initial cost of $29,350 is expected to generate cash flows of $7,200, $9,300, $9,400, $8,300 and $8,000 over each of the next 5 years respectively. what is the project payback period

Question