Suppose a company has proposed a new 4-year project. The project has an initial outlay of $17,000 and has expected cash flows of $8,000 in year 1, $9,000 in year 2, $10,000 in year 3, and $14,000 in year 4. The required rate of return is 15% for projects at this company. What is the profitability index for this project? (Answer to the nearest hundredth, e.g. 1.23)
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General City's general fund reported a supplies inventory costing $200,000 at the beginning of the fiscal year. During the year, General City purchased materials and supplies on account for $15,000,000; $900,000 remains unpaid at year-end. Materials and supplies costing $125,000 are on hand at the end of the fiscal year. Prepare the journal entries made this year using the consumption method and purchases method
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Suppose a company has proposed a new 4-year project. The project has an initial outlay of $29,000 and has expected cash flows of $7,000 in year 1, $8,000 in year 2, $11,000 in year 3, and $13,000 in year 4. The required rate of return is 14% for projects at this company. What is the profitability index for this project? (Answer to the nearest hundredth, e.g. 1.23)
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Havana, Inc., has identified an investment project with the following cash flows. If the discount rate is 9 percent, what is the future value of these cash flows in Year 5? (Hint: Be careful with the number of periods.) If the picture doesn't load, the cash flows shown in the picture are as follows: 910 in year 1; 1140 in year 2; 1360 in year 3; and 2100 in year 4.
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2. A What is the monthly payment amount on a $100,000 home loan if the rate is 8.0% APR, and the loan is made for a 15-year period?
B A four-year investment requires annual deposits of $300 at the beginning of each year. The deposits earn 6% per year. What is the investment’s future value? Remember, the deposits are made at the beginning of each year (annuity due).
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A recent edition of The Wall Street Journal reported interest rates of 3.10 percent, 3.45 percent, 3.76 percent, and 3.02 percent for three-year, four-year, five-year, and six-year Treasury notes, respectively. According to the unbiased expectations theory of the term structure of interest rates, what are the expected one-year rates during years 4, 5, and 6?
In: Finance
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Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.52 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,020,000 in annual sales, with costs of $715,000. The project requires an initial investment in net working capital of $240,000, and the fixed asset will have a market value of $290,000 at the end of the project. If the tax rate is 30 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign.) |
| Years | Cash Flow |
| Year 0 | $ |
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
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If the required return is 16 percent, what is the project's NPV? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) |
| NPV | $ |
In: Finance
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Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.94 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,160,000 in annual sales, with costs of $855,000. The project requires an initial investment in net working capital of $380,000, and the fixed asset will have a market value of $250,000 at the end of the project. If the tax rate is 34 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign.) |
| Years | Cash Flow |
| Year 0 | $ |
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
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If the required return is 10 percent, what is the project's NPV? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) |
| NPV | $ |
In: Finance
A developer has 20 acres of real estate for a project. She has two projects to consider for the land. She can only select one project as both require all 20 acres. The developer is looking at a 10-year time frame for this investment. The expected cash flows from the projects are described below: PROJECT A: Apartments with retail space. The project will require $1,140,927.00 invested today, and an additional $800,000.00 in one year. The project will generate a cash flow of $250,000.00 in the second year. Cash flows will grow at 3.00% per year for the remainder of the 10-year project. The developer believes she can sell the property in year 10 for a cash flow of $3,000,000.00. PROJECT B: Upscale neighborhood The project will require $820,329.00 invested today, and will generate $200,000.00 in the first year. The cash flows from the project will DECLINE by 4.00% per year for the remainder of the 10-year project. The developer will not have any rights to the property at the end of the 10th year as the neighborhood will be fully developed. The developer wants a 15.00% return on his investments.
In: Finance
A developer has 20 acres of real estate for a project. She has two projects to consider for the land. She can only select one project as both require all 20 acres. The developer is looking at a 10-year time frame for this investment. The expected cash flows from the projects are described below:
PROJECT A: Apartments with retail space. The project will require $1,039,260.00 invested today, and an additional $800,000.00 in one year. The project will generate a cash flow of $250,000.00 in the second year. Cash flows will grow at 5.00% per year for the remainder of the 10-year project. The developer believes she can sell the property in year 10 for a cash flow of $3,000,000.00.
PROJECT B: Upscale neighborhood The project will require $842,924.00 invested today, and will generate $200,000.00 in the first year. The cash flows from the project will DECLINE by 5.00% per year for the remainder of the 10-year project. The developer will not have any rights to the property at the end of the 10th year as the neighborhood will be fully developed.
The developer wants a 15.00% return on his investments.
What is the NPV of project B?
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