Question

In: Finance

1. Suppose you have an investment that costs $80,000 at the beginning of the project, and...

1. Suppose you have an investment that costs $80,000 at the beginning of the project, and it generates $30,000 a year for four years in positive cash flows. The cost of capital is 12%. The IRR of the project is 18.45% and the NPV is about $11,120. The IRR model assumes that at the end of the first year you can invest the $30,000 at ________.

a. 12.00%

b. a rate greater than the IRR

c.  rate less than the cost of capital

d. 18.45%

2. Find the Modified Internal Rate of Return (MIRR) for the following annual series of cash flows, given a discount rate of 14.00%: Year 0: -$65,000; Year 1: $25,000; Year 2: $12,000; Year 3: $12,000; Year 4: $12,000; and, Year 5: $12,000.

a. About 8.35%

b. About 6.35%

c. About 9.27%

d. About 7.88%

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

a. You are planning an investment in a project with an initial cost of $ 80,000....
a. You are planning an investment in a project with an initial cost of $ 80,000. That project is expected to produce an NCF of $ 20,000 annually for the next six years. your expected rate of return is 10%. Compute for that project the following: payback period, net present value, internal rate of return, and profitability index. b. A company is considering two independent projects between them. The initial cost for project A is $ 50,000 and for project...
Suppose you have a project that has a 0.9 chance of triplingyour investment in a...
Suppose you have a project that has a 0.9 chance of tripling your investment in a year and a 0.1 chance of doubling your investment in a year. What is the standard deviation of the rate of return on this investment? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.)Standard Deviation ______ %
What is the NPV of an equipment investment that costs $150,000 and returns $80,000 in the...
What is the NPV of an equipment investment that costs $150,000 and returns $80,000 in the first year but then declines by 8%/year with the final cash flow coming in year 5? Also assume a discount rate of 9.4% and that the equipment can be sold for $45,000 at the end of the fifth year. $250,000 $266,400 $116,400 $190,900 $145,100
You are interested in an investment project that costs $ 46125 initially. The investment has a...
You are interested in an investment project that costs $ 46125 initially. The investment has a 5​-year horizon and promises future​ end-of-year cash inflows of $ 12300​, $ 12915​, $ 11685​, $ 9225​, and $ 8610​, respectively. Your current opportunity cost is 6.84 % per year.​ However, the Fed has stated that inflation may rise by 1.5 % or may fall by the same amount over the next 5 years. Assume a direct positive impact of inflation on the prevailing...
You can buy a printing press for $80,000. You will have to pay labor costs of...
You can buy a printing press for $80,000. You will have to pay labor costs of $20,000 per year due at the beginning of each year for 6 years. You can print and sell 2,000 books per year and sell each for $60 (at the end of each year). Variable costs are $12 per book. At the beginning of each year, you must have NWC equal to 20% of end-of-year net sales. The net working capital will be recouped when...
You can buy a printing press for $80,000. You will have to pay labor costs of...
You can buy a printing press for $80,000. You will have to pay labor costs of $20,000 per year due at the beginning of each year for 6 years. You can print and sell 2,000 books per year and sell each for $60 (at the end of each year). Variable costs are $12 per book. At the beginning of each year, you must have NWC equal to 20% of end-of-year net sales. The net working capital will be recouped when...
You can buy a printing press for $80,000. You will have to pay labor costs of...
You can buy a printing press for $80,000. You will have to pay labor costs of $20,000 per year due at the beginning of each year for 6 years. You can print and sell 2,000 books per year and sell each for $60 (at the end of each year). Variable costs are $12 per book. At the beginning of each year, you must have NWC equal to 20% of end-of-year net sales. The net working capital will be recouped when...
A company is considering a project with an initial investment of $80,000. The annual inflow from...
A company is considering a project with an initial investment of $80,000. The annual inflow from the project is $10,000 for ten years. The salvage value for the project is $12,000 in year ten. The cost of capital is 12%. Should the company make this investment?
You have the opportunity to make an investment that costs $900,000. If you make this investment...
You have the opportunity to make an investment that costs $900,000. If you make this investment now, you will receive $100,000 one year from today, $250,000 and $800,000 two and three years from today, respectively. The appropriate discount rate is 12%. Should you make the investment?
Question 1 Suppose that you have been appointed the project manager for a project to develop...
Question 1 Suppose that you have been appointed the project manager for a project to develop an online booking system for a multi-doctor medical practice that will replace an existing desktop system. The key functionality that is required is as follows: • Patient registration • Patient login • Book first available appointment with any doctor • Book an appointment at a time of the patient’s choosing with a doctor of their choice. What development methodologies should you consider? How would...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT