Question

In: Finance

You are considering a project that costs $500 to invest in today, and will pay you $100 next year, $50 in two years, and $100 in three years.

 

You are considering a project that costs $500 to invest in today, and will pay you $100 next year, $50 in two years, and $100 in three years. The cash inflow will grow at a constant rate of 3% per year after year 3, and you will receive cash inflows for 25 years (total including the first three CFs). Your discount rate is 14%. What is the NPV of the project? Also, what would the NPV be if the cash inflows continued forever? Show your work

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You are considering a project that costs $500 to invest in today, and will pay you $100 next year, $50 in two years, and $100 in three years.
You are considering a project that costs $500 to invest in today, and will pay you $100 next year, $50 in two years, and $100 in three years. The cash inflow will grow at a constant rate of 3% per year after year 3, and you will receive cash inflows for 25 years (total including the first three CFs). Your discount rate is 14%. What is the NPV of the project? Also, what would the NPV be if the cash...
You are considering a project that costs $500 to invest in today, and will pay you...
You are considering a project that costs $500 to invest in today, and will pay you $100 next year, $50 in two years, and $100 in three years. The cash inflow will grow at a constant rate of 3% per year after year 3, and you will receive cash inflows for 25 years (total including the first three CFs). Your discount rate is 14%. What is the NPV of the project? Also, what would the NPV be if the cash...
You are considering a project that costs $500 to invest in today, and will pay you...
You are considering a project that costs $500 to invest in today, and will pay you $100 next year. The cash inflow will grow at a constant rate of 3% per year after year 1, and you will receive cash inflows for 20 years (total including the first year CF). Your discount rate is 16%. What is the NPV of the project? Also, what would the NPV be if the cash inflows continued forever? Show your work.
You invest in a project that will pay you $500 per year for 5 years and then pays $750 per year for the following 10 years
You invest in a project that will pay you $500 per year for 5 years and then pays $750 per year for the following 10 years (assume that all payments are made at the end of the year). You require a 6% rate of return on this type of investment. Give your return requirement, what is the maximum amount that you would be willing to pay today for the cash flow stram associated with this project? Round only your final...
You have $5,000 to invest for the next year and are considering three alternatives a) A...
You have $5,000 to invest for the next year and are considering three alternatives a) A money market fund with an average maturity of 30 days offering a current annualized yield of 3%. b) A two-year CD at a bank offering an interest rate of 4.5% c) A 20-year U.S. Treasury bond offering a yield to maturity of 6% per year. What role does your forecast of future interest rates play in your decision?
You have $5,000 to invest for the next year and are considering three alternatives: A money...
You have $5,000 to invest for the next year and are considering three alternatives: A money market fund with an average maturity of 30 days offering a current yield of 2.0% per year A 1-year savings deposit at a bank offering an interest rate of 4.0% A 20-year U.S. Treasury bond offering a yield to maturity of 4.0% per year A 20-year corporate bond offering a yield to maturity of 7. What is the risk profile of each of these...
If you save $500 today, $1,000 a year from today, and $2,000 two years from today...
If you save $500 today, $1,000 a year from today, and $2,000 two years from today in an account that earns 12% per year, compounded monthly, how much will you have in three years? Group of answer choices $4,238.77 $4,694.68 $3,920.00 $4,196.86
You are planning to invest in a project which costs $40 million today. The project will...
You are planning to invest in a project which costs $40 million today. The project will produce returns of $4 million per year for five years and the scrap value will be $20 million. That is, you will receive $4 million at the end of the year, for each of the next five years, and you will receive $20 million at the end of the fifth year. Question (a) [2 marks] What is the net present value of the project...
You had to pay $500 three months ago, $500 today and and $499.55 three month from...
You had to pay $500 three months ago, $500 today and and $499.55 three month from today. if 12% simple intrest is charged when single payment of 1590 will settle debt ? Answer provide in months
Suppose you receive $100 at the end of each year for the next three years. a....
Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8% per annum (interest paid annually), what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in part (a)? c. Assume that no withdrawals are made from the savings account until the end of the third year. What is the interest component? d. Compute the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT