NPV = PV of cash Inflows - PV of cash Outflows
Part A:
Year | CF | PVF @12% | Disc CF |
0 | $ -4,62,000.00 | 1.0000 | $ -4,62,000.00 |
1 | $ 1,29,000.00 | 0.8929 | $ 1,15,178.57 |
2 | $ 2,00,000.00 | 0.7972 | $ 1,59,438.78 |
3 | $ 1,88,000.00 | 0.7118 | $ 1,33,814.69 |
4 | $ 1,29,000.00 | 0.6355 | $ 81,981.83 |
NPV | $ 28,413.87 |
Project can be accepted as it has +ve NPV.
Part B:
0 | $ -4,62,000.00 | 1.0000 | $ -4,62,000.00 |
1 | $ 1,29,000.00 | 0.8547 | $ 1,10,256.41 |
2 | $ 2,00,000.00 | 0.7305 | $ 1,46,102.71 |
3 | $ 1,88,000.00 | 0.6244 | $ 1,17,381.66 |
4 | $ 1,29,000.00 | 0.5337 | $ 68,840.86 |
NPV | $ -19,418.36 |
Project is rejected as it has -ve NPV.
Part C:
Year | CF | PVF @22% | Disc CF |
0 | $ -4,62,000.00 | 1.0000 | $ -4,62,000.00 |
1 | $ 1,29,000.00 | 0.8197 | $ 1,05,737.70 |
2 | $ 2,00,000.00 | 0.6719 | $ 1,34,372.48 |
3 | $ 1,88,000.00 | 0.5507 | $ 1,03,532.89 |
4 | $ 1,29,000.00 | 0.4514 | $ 58,230.48 |
NPV | $ -60,126.44 |
Project is rejected as it has - ve NPV.
Net present value. Lepton Industries has a project with the following projected cash flows: 3: a....
Net present value. Lepton Industries has a project with the following projected cash flows: a. Using a discount rate of 10% for this project and the NPV model, determine whether the company should accept or reject this project. b. Should the company accept or reject it using a discount rate of 17%? c. Should the company accept or reject it using a discount rate of 20%? a. Using a discount rate of 10%, this project should be V. (Select from...
P9-8 (similar to) EQuestion Help Net present value. Lepton Industries has a project with the following projected cash flows: a. Using a discount rate of 9% for this project and the NPV model, determine whether the company should accept or reject this project b. Should the company accept or reject it using a discount rate of 17% ? c. Should the company accept or reject it using a discount rate of 20 %? . (Select from the drop-down menu.) a....
4. Lepton Industries has a project with the following projected cash flows: Initial Cost, Year 0: $468,000 Cash flow year one: $135,000 Cash flow year two: $240,000 Cash flow year three: $185,000 Cash flow year four: $135,000 Plot the NPV profile of this project in Excel. Start with discount rate equal to zero and increase the discount rate by 2% increments until discount rate equal to 30%. For what discount rates would Lepton accept this project? For what discount rates...
Homework: Chapter 9 Homework (Copy) 4 of 9 (5 complete) Score: 0 of 2 pts P9-7 (similar to) Net present value. Quark Industries has a project with the following projected cash flows: a. Using a discount rate of 9% for this project and the NPV model, determine whether the company should accept or reject this project. b. Should the company accept or reject it using a discount rate of 16%? c. Should the company accept or reject it using a...
Comparing all methods. Risky Business is looking at a project with the following estimated cash flow: 5. Risky Business wants to know the payback period, NPV, IRR, MIRR, and Pl of this project. The appropriate discount rate for the project is 9%. If the cutoff period is 6 years for major projects, determine whether the management at Risky Business will accept or reject the project under the five different decision models. What is the payback period for the new project...
comparing all methods. Risky Business is looking at a proiect with the following estimated cash flow. RISKY buon wants to know the payback period, NPV, IRR. MIRR. and Pl of this project. The appropriate discount rate for the project is reject the project under the five different decision models. termine whether the management at Risky Business will accept or What is the payback period for the new project at Risky Business? years (Round to two decimal places.) (Select from the...
1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one of the most common and preferred criteria that generally lead to good investment decisions. Consider this case: Suppose Cute Camel Woodcraft Company is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $550,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $375,000 Year 2 $450,000...
Profitability index. Given the discount rate and the future cash flow of each project listed in the following table, , use the Pl to determine which projects the company should accept. What is the Pl of project A? Data Table (Round to two decimal places.) (Click on the following icon in order to copy its contents into a spreadsheet.) Cash Flow Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Discount rate Project A - $2,200,000 $700,000...
NPV profile of a project. Given the following cash flow of Project L-2, draw the NPV profile. Hint: Be sure to use a discount rate of zero for one intercept (y-axis) and solve for the IRR for the other intercept (x-axis). (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 = - $290,000 Year 1 = $44,000 Year 2 = $75,000 Year 3 = $116,000 Year 4 = $140.000 What is the NPV...
NPV profile of a project. Given the following cash flow of Project L-2, draw the NPV profile. Hint: Be sure to use a discount rate of zero for one intercept (y-axis) and solve for the IRR for the other intercept (x-axis). (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 = - $270,000 Year 1 = $49,000 Year 2 = $80,000 Year 3 = $110,000 Year 4 = $136,000 What is the NPV...