Question

In: Finance

Home Depot has been presented with an investment opportunity that will yield end-of-year cash flows of...

Home Depot has been presented with an investment opportunity that will yield end-of-year cash flows of $45,000 per year in years 1 through 4, $38,000 per years 5 through 9, and $42,000 in year 10. This investment will cost the firm $185,000 today, and the firm's cost of capital is 6%. What is the NPV for this investment? Please include formula and numbers used.

Solutions

Expert Solution

Ans $ 121172.63

Year Project Cash Flows (i) DF@ 6% DF@ 6% (ii) PV of Project ( (i) * (ii) )
0 -185000 1 1                (1,85,000.00)
1 45000 1/((1+6%)^1) 0.943                     42,452.83
2 45000 1/((1+6%)^2) 0.890                     40,049.84
3 45000 1/((1+6%)^3) 0.840                     37,782.87
4 45000 1/((1+6%)^4) 0.792                     35,644.21
5 38000 1/((1+6%)^5) 0.747                     28,395.81
6 38000 1/((1+6%)^6) 0.705                     26,788.50
7 38000 1/((1+6%)^7) 0.665                     25,272.17
8 38000 1/((1+6%)^8) 0.627                     23,841.67
9 38000 1/((1+6%)^9) 0.592                     22,492.14
10 42000 1/((1+6%)^10) 0.558                     23,452.58
PV                  1,21,172.63

jeff jeffy answered 7 months ago
Next > < Previous

Related Solutions

The Terug Corporation has been presented with an investment opportunity which will yield end-of-year cash flows...
The Terug Corporation has been presented with an investment opportunity which will yield end-of-year cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. What are the NPV, IRR and MIRR values for this investment? a. NPV $135,984; IRR 17.07%; MIRR 11.27% b. NPV $18,023; IRR 16.24%: MIRR 13.27%...
The OMEGA Corporation has been presented with an investment opportunity that will yield cash flows of...
The OMEGA Corporation has been presented with an investment opportunity that will yield cash flows of $60,000 per year in Years 1 through 4, $70,000 per year in Years 5 through 9, and $80,000 in Year 10. This investment will cost the firm $300,000 today, and the firm’s cost of capital is 10 percent. Assume cash flows occur evenly during the year, 1/365th each day. What is the payback period for this investment? a. 5.23 years b. 4.86 years c....
Dow Chemical has been presented with an investment opportunity which will yield end of year cash...
Dow Chemical has been presented with an investment opportunity which will yield end of year cash flows of $3,350 per year in Years 1 through 4, $3,450 per year in Years 5 through 9, and $8,800 in Year 10. This investment will cost the firm $6,850 today, and the firm's required rate of return is 7 percent. What is the NPV for this investment? Group of answer choices $19,762.30 $–1,976.23 $21,738.53 $17,786.07 $23,714.76 Bristol Myers Squibb has been presented with...
The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of​...
The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of​ $30,000 per year in Years 1 through​ 4, $35,000 per year in Years 5 through​ 9, and​ $40,000 in Year 10. This investment will cost the firm​ $100,000 today, and the​ firm's cost of capital is​ 10%. Assume cash flows occur evenly during the year. The discounted payback period is A. 3.72 years. B. 4.26 years. C. 5.23 years. D. 4.35 years.
3. The Tassel Ltd. has been presented with an investment opportunity which will yield end of...
3. The Tassel Ltd. has been presented with an investment opportunity which will yield end of year revenue of $20,000 per year in Years 1 through 4, $25,000 per year in Years 5 through 9, and $3 4. Using the information in Q3, if the tax rate is 30%, and Tassel uses prime-cost approach for depreciations with the salvage value of $20,000, do you think Tassel should implement this investment and why? Please demonstrate your answer by showing your capital...
You are presented with an investment opportunity that will give you the following stream of cash flows:
You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 5 years; at the following year, an amount of $2,000 per year until year 13; and then an amount of $10,000 per year until year 23. If your required rate of return (APR) is 8% compounded annually, what is the present value today of these cash flows?Do not use the $ sign. Use commas to separate thousands. Use to...
1. A company has been presented with the two investment opportunity. Project 1: The investment outlay...
1. A company has been presented with the two investment opportunity. Project 1: The investment outlay is expected to be $130,000 in Year 0. After that, the project is expected to earn operating cash flows of $40,000 per year for the next 4 years. Project 2: The investment outlay is expected to be $125,000 in Year 0. After that, the project is expected to earn operating cash flows of $37,000 per year for the next 4 years. If your cost...
An investment costs $2,921 today and provides cash flows at the end of each year for...
An investment costs $2,921 today and provides cash flows at the end of each year for 21 years. The investments expected return is 8.5%. The projected cash flows for Years 1, 2, and 3 are $101, $277, and $372, respectively. What is the annual cash flow received for each of Years 4 through 21 (i.e., 18 years)? Assume the same payment for each of these years. (Round answer to 2 decimal places. Do not round intermediate calculations).
You are presented with an investment opportunity that will give you the following stream of cash...
You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 5 years; at the following year, an amount of $3,000 per year until year 10; and then an amount of $8,000 per year until year 25. If your required rate of return (APR) is 12% compounded annually, what is the present value today of these cash flows?
You are presented with an investment opportunity that will give you the following stream of cash...
You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 2 years; at the following year, an amount of $5,000 per year until year 14; and then an amount of $8,000 per year until year 22. If your required rate of return (APR) is 9% compounded annually, what is the present value today of these cash flows?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT