Homework Answers
| Year | Cash flow | present value factor @ 4% | Present value of cash flow [cash flow *Present value factor] |
| 0 | -5000 | 1 | -5000 |
| 1 | 1000 | .96154 | 961.54 |
| 2 | 1000 | .92456 | 924.56 |
| 3 | 2000 | .88900 | 1778 |
| 4 | 2000 | .85480 | 1709.60 |
| Net Present value | 373.7 | ||
**Find present value factor using the formula 1/(1+i)^n where i= 4% ,n =1,2,3,4
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Year Return at the end of the year $1000 $1000 $2000 $2000 14. You are planning...
14. You are planning on investing in a project which will last 4 years. You will...
14. You are planning on investing in a project which will last 4 years. You will invest $5,000 at a rate of 4%. Calculate the Net Present Value (NPV) of the project. You expect the project to return the following: (12 points) Year Return at the end of the year $1000 $1000 $2000 $2000
Question 6 5 pts (Numbers in parentheses are negative) These two projects are independent. Year Cash...
Question 6 5 pts (Numbers in parentheses are negative) These two projects are independent. Year Cash Flow of A Cash Flow of B 0 ($5000) ($2000) 1 $1000 $1000 2 $2000 $1000 3 $2000 $2000 4. $2000 $1000 5 $1000 ($1000) What is the approximate crossover point between the two projects if the required rate of return is 9.5%? 12.39% O 7.24% There is no crossover point in this case. 0 7.57% O 6.12% Question 7 5 pts (Numbers in...
14. The following table shows the cash flow for the costs of the Self Performing Contractor...
14. The following table shows the cash flow for the costs of the Self Performing Contractor and estimates for revenues from a residential project. (in x1000 TL) a) Calculate the Net Cash Flow and the Cumulative Cash Flow for the project (2 points) b) What is the payback period for the project? (2 points) c) What is the Net Present Value (NPV) of the project to the Self Performing Contractor, if the discount rate is i=7% (3 points). d) Would...
(Numbers in parentheses are negative) These two projects are independent. Year Cash Flow of A Cash...
(Numbers in parentheses are negative) These two projects are independent. Year Cash Flow of A Cash Flow of B 0 ($5000) ($2000) 1 $1000 $1000 2 $2000 $1000 3 $2000 $2000 4 $2000 $1000 5 $1000 ($1000) Based on the firms' NPV profiles which project should be taken if the required rate of return is 9.5%? Project B because it will raise the value of the firm by the greatest amount based on NPV. Both projects should be taken because...
Generic Motors Corporation is planning to invest $225,000 in year zero (today) in new equipment. This...
Generic Motors Corporation is planning to invest $225,000 in year zero (today) in new equipment. This investment is expected to generate net cash flows of $90,000 a year for the next 4 years (years 1-4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20% a year Required: a) What is the net present value (NPV) of this project? NPV $ Should the firm invest, based on NPV? (1=yes, 2=no) b) What is the...
Question 1 (evaluating investment projects) Generic Motors Corporation is planning to invest $150,000 in year zero...
Question 1 (evaluating investment projects) Generic Motors Corporation is planning to invest $150,000 in year zero (today) in new equipment. This investment is expected to generate net cash flows of $60,000 a year for the next 4 years (years 1-4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20 % a year Required: a) What is the net present value (NPV) of this project? NPV Should the firm invest, based on NPV? (1-yes,...
(Numbers in parentheses are negative cash flows) These two projects are independent. Year Cash Flow of...
(Numbers in parentheses are negative cash flows) These two projects are independent. Year Cash Flow of A Cash Flow of B 0 ($5000) ($2000) 1 $1000 $1000 2 $2000 $1000 3 $2000 $2000 4 $2000 $1000 5 $1000 ($1000) What is the approximate NPV of project A if the required rate of return is 9.5%? $390 $572 $581 $1131 $3000
20 An investment paying $1000 in 1 year, $2000 in 2 years and $7000 in 3...
20 An investment paying $1000 in 1 year, $2000 in 2 years and
$7000 in 3 years returning 10% p.a. has a present value of:
a. $8129.39
b. $6002.54
c. $7210.20
d. $7821.19
21. An investment paying $2000 in 2 year, $6000 in 4 years and $5000 in 12 years at an interest rate of 5% p.a. has a present value of: a. $7906.86 b. $6505.29 c. $7354.21 d. $12 090.49 22 Cash flows of $5000 in 2 years and...
Question 1 (evaluating investment projects) Generic Motors Corporation is planning to invest $100,000 in year zero...
Question 1 (evaluating investment projects) Generic Motors Corporation is planning to invest $100,000 in year zero (today) in new equipment. This investment is expected to generate net cash flows of $40,000 a year for the next 4 years (years 1-4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20% a year. Required: a) What is the net present value (NPV) of this project? NPV = $ Should the firm invest, based on NPV?...
Consider the following 5-years investment table of Agus's cash flow with required return rate j=11% (RRR)....
Consider the following 5-years investment table of Agus's cash flow with required return rate j=11% (RRR). Discounted is a discount factor based on RRR. Contribution is amount of money that Agus paid to start the business (investment). Whereas, return is amount of money that Agus received from the investment. Furthermore, PV Contrib is present value of Contribution based on RRR, then Net Cash Flow is Return minus Contribution. Moreover, Discounted Cash Flow is present value of Net Cash Flow based...
14. You are planning on investing in a project which will last 4 years. You will invest $5,000 at a rate of 4%. Calculate the Net Present Value (NPV) of the project. You expect the project to return the following: (12 points) Year Return at the end of the year $1000 $1000 $2000 $2000
Question 6 5 pts (Numbers in parentheses are negative) These two projects are independent. Year Cash Flow of A Cash Flow of B 0 ($5000) ($2000) 1 $1000 $1000 2 $2000 $1000 3 $2000 $2000 4. $2000 $1000 5 $1000 ($1000) What is the approximate crossover point between the two projects if the required rate of return is 9.5%? 12.39% O 7.24% There is no crossover point in this case. 0 7.57% O 6.12% Question 7 5 pts (Numbers in...
14. The following table shows the cash flow for the costs of the Self Performing Contractor and estimates for revenues from a residential project. (in x1000 TL) a) Calculate the Net Cash Flow and the Cumulative Cash Flow for the project (2 points) b) What is the payback period for the project? (2 points) c) What is the Net Present Value (NPV) of the project to the Self Performing Contractor, if the discount rate is i=7% (3 points). d) Would...
(Numbers in parentheses are negative) These two projects are independent. Year Cash Flow of A Cash Flow of B 0 ($5000) ($2000) 1 $1000 $1000 2 $2000 $1000 3 $2000 $2000 4 $2000 $1000 5 $1000 ($1000) Based on the firms' NPV profiles which project should be taken if the required rate of return is 9.5%? Project B because it will raise the value of the firm by the greatest amount based on NPV. Both projects should be taken because...
Generic Motors Corporation is planning to invest $225,000 in year zero (today) in new equipment. This investment is expected to generate net cash flows of $90,000 a year for the next 4 years (years 1-4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20% a year Required: a) What is the net present value (NPV) of this project? NPV $ Should the firm invest, based on NPV? (1=yes, 2=no) b) What is the...
Question 1 (evaluating investment projects) Generic Motors Corporation is planning to invest $150,000 in year zero (today) in new equipment. This investment is expected to generate net cash flows of $60,000 a year for the next 4 years (years 1-4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20 % a year Required: a) What is the net present value (NPV) of this project? NPV Should the firm invest, based on NPV? (1-yes,...
(Numbers in parentheses are negative cash flows) These two projects are independent. Year Cash Flow of A Cash Flow of B 0 ($5000) ($2000) 1 $1000 $1000 2 $2000 $1000 3 $2000 $2000 4 $2000 $1000 5 $1000 ($1000) What is the approximate NPV of project A if the required rate of return is 9.5%? $390 $572 $581 $1131 $3000
20 An investment paying $1000 in 1 year, $2000 in 2 years and
$7000 in 3 years returning 10% p.a. has a present value of:
a. $8129.39
b. $6002.54
c. $7210.20
d. $7821.19
21. An investment paying $2000 in 2 year, $6000 in 4 years and $5000 in 12 years at an interest rate of 5% p.a. has a present value of: a. $7906.86 b. $6505.29 c. $7354.21 d. $12 090.49 22 Cash flows of $5000 in 2 years and...
Question 1 (evaluating investment projects) Generic Motors Corporation is planning to invest $100,000 in year zero (today) in new equipment. This investment is expected to generate net cash flows of $40,000 a year for the next 4 years (years 1-4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20% a year. Required: a) What is the net present value (NPV) of this project? NPV = $ Should the firm invest, based on NPV?...
Consider the following 5-years investment table of Agus's cash flow with required return rate j=11% (RRR). Discounted is a discount factor based on RRR. Contribution is amount of money that Agus paid to start the business (investment). Whereas, return is amount of money that Agus received from the investment. Furthermore, PV Contrib is present value of Contribution based on RRR, then Net Cash Flow is Return minus Contribution. Moreover, Discounted Cash Flow is present value of Net Cash Flow based...
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