Question
In: Finance
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following...
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be $1 comma 850 000, and the project would generate incremental free cash flows of $700,000 per year for 6 years. The appropriate required rate of return is 7 percent.
a. What is the project's NPV? $ ____ (Round to the nearest dollar.)
b. What is the project's PI? _____ (Round to three decimal places.)
c. What is the project's IRR? ______% (Round to two decimal places.)
d. Should this project be accepted? (Select the best choice below.)
A. Yes. The project should be accepted because the project's NPV is positive, PI is greater than one, and IRR is greater than the required rate of return.
B. No. The project should be rejected because the project's NPV is negative, PI is less than one, and IRR is less than the required rate of return.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following...
Fijisawa Inc. is considering a major expansion of its product
line and has estimated the following cash flows associated with
such an expansion, the initial outlay would be $1,900,000 and the
project would generate cash flows of $450,000 per year for six
years, the appropriate discount rate is 9%.
Calculate the net present value.
Calculate the profitability index.
Calculate the internal rate of return.
Should this project be accepted? Why or why not?
Fijisawa, Inc. is considering a major expansion of its product line and has estimated the following...
Fijisawa, Inc. is considering a major expansion of its product
line and has estimated the following cash flows associated with
such an expansion. The initial outlay would be $11,800,000, and
the project would generate cash flows of $1,300,000 per year for
20 years. The appropriate discount rate is 7.4 percent.
a. Calculate the NPV.
b. Calculate the PI.
c. Calculate the IRR.
d. Should this project be accepted? Why or why
not?
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following...
Fijisawa Inc. is considering a major expansion of its product
line and has estimated the following cash flows associated with
such an expansion. The initial outlay would be
$1,850,000
and the project would generate incremental free cash flows
of
$700,000
per year for
66
years. The appropriate required rate of return is
88
percent.
a. Calculate the
NPV.
b. Calculate the
PI.
c. Calculate the
IRR.
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following...
Fijisawa Inc. is considering a major expansion of its product
line and has estimated the following cash flows associated with
such an expansion. The initial outlay would be
$1,850,000,
and the project would generate incremental free cash flows
of
$700,000
per year for
6
years. The appropriate required rate of return is
8
percent.
a. Calculate the
NPV.
b. Calculate the
PI.
c. Calculate the
IRR.
d. Should this project be accepted?
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following...
Fijisawa Inc. is considering a major expansion of its product
line and has estimated the following cash flows associated with
such an expansion. The initial outlay would be
$2,000,000 ,
and the project would generate incremental free cash flows
of
$500,000
per year for
6
years. The appropriate required rate of return is
7
percent.
a. Calculate the
NPV.
b. Calculate the
PI.
c. Calculate the
IRR.
d. Should this project be accepted?
a.
What
is the project's
NPV ?...
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following...
Fijisawa Inc. is considering a major expansion of its product
line and has estimated the following cash flows associated with
such an expansion. The initial outlay would be
$2,000,000,
and the project would generate incremental free cash flows
of
$650,000
per year for
5
years. The appropriate required rate of return is
9
percent.
a. Calculate the
NPV.
b. Calculate the
PI.
c. Calculate the
IRR.
d. Should this project be accepted?
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following...
Fijisawa Inc. is considering a major expansion of its product
line and has estimated the following cash flows associated with
such an expansion. The initial outlay would be $1,800,000, and
the project would generate incremental free cash flows of $700,000
per year for 6 years. The appropriate required rate of return is 6
percent.
a. Calculate the NPV.
b. Calculate the PI.
c. Calculate the IRR.
d. Should this project be accepted?
-Financial Management Principles Fijisawa Inc. is considering a major expansion of its product line and has...
-Financial Management Principles
Fijisawa Inc. is considering a major expansion of its product
line and has estimated the following cash flows associated with
such an expansion, the initial outlay would be $1,900,000 and the
project would generate cash flows of $450,000 per year for six
years, the appropriate discount rate is 9%.
Calculate the net present value.
Calculate the profitability index.
Calculate the internal rate of return.
Should this project be accepted? Why or why not?
2.Gio’s Restaurants is considering...
(Calculating NPV, PI, and IRR) Fijisawa, Inc. is considering a major expansion of its product line...
(Calculating NPV, PI, and IRR) Fijisawa, Inc. is considering
a major expansion of its product line and has estimated the
following cash flows associated with such an expansion. The initial
outlay would be $11,100,000, and the project would generate cash
flows of $1,290,000 per year for 20 years. The appropriate
discount rate is 8.1 percent.
a. Calculate the NPV.
b. Calculate the PI.
c. Calculate the IRR.
d. Should this project be accepted? Why or why not?
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a. The...
(NPV, PI, and IRR calculations) Fijisawa Inc. is considering a major expansion of its product line...
(NPV, PI, and IRR calculations) Fijisawa Inc. is considering
a major expansion of its product line and has estimated the
following cash flows associated with such an expansion. The initial
outlay would be $1,850,000, and the project would generate
incremental free cash flows of $500,000 per year for 6 years. The
appropriate required rate of return is 6 percent.
a. Calculate the NPV.
b. Calculate the PI.
c. Calculate the IRR.
d. Should this project be accepted?
a. What is...
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