Homework Answers
| a | IRR | 9.70% |
| b | NPV | -52.59 |
| c | Payback | 2.5 |
d: The project should be rejected since NPV is negative.
Workings
| Year | Initial cost | cumulative CF |
| 0 | -10000 | -10000 |
| 1 | 4000 | -6000.00 |
| 2 | 4000 | -2000.00 |
| 3 | 4000 | 2000.00 |
Payback = Year in which Cumulative CF is last negative -(Last negative cumulative CF/ CF of next year
Add Answer to:
2. A firm has well spend -10,000 today for a project. The after tax cash flow...
Given the following after-tax cash flow on a new toy for Tyler's Toys, find the project's...
Given the following after-tax cash flow on a new toy for Tyler's Toys, find the project's payback period, NPV, and IRR. The appropriate discount rate for the project is 9%. If the cutoff period is 6 years for major projects, determine whether management will accept or reject the project under the three different decision models. Initial cash outflow: $12,800,000 Years one through four cash inflow: $3,200,000 each year Year five cash outflow: $1,280,000 Years six through eight cash inflow: $548,667...
A project that costs $1 million will yield annual after-tax operating cash flow (including depreciation tax...
A project that costs $1 million will yield annual after-tax operating cash flow (including depreciation tax shields) of $500,000 for the next five years. The firm has a D/E ratio of 0.5 and after-tax cost of equity and debt of 20% and 10%, respectively. As this project is slightly riskier than the firm's normal operations, it is decided that an adjustment factor of +3% will be added to the discount rate for the project. What is this project's NPV?
Please do not work in excel and also please show your calculations. FastTrack Bikes, Inc. is...
Please do not work in excel and also please show your calculations. FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $200,000 per year. Once in production, the bike is expected to make $300,000 (after expenses) per year for 10 years. The cash inflows begin at the end of year 7. At FastTrack, there is a difference of opinion as to the "best" decision rule to use. The...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 2 3 4 5 Project M -$24,000 $8,000 $8,000 $8,000 $8,000 $8,000 Project N -$72,000 $22,400 $22,400 $22,400 $22,400 $22,400 Assuming the projects are independent, which one(s) would you recommend? -Select-Only Project M would be accepted because NPV(M) > NPV(N).Only Project N would be accepted because NPV(N) > NPV(M).Both projects would be accepted since both...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 2 3 4 5 Project M -$24,000 $8,000 $8,000 $8,000 $8,000 $8,000 Project N -$72,000 $22,400 $22,400 $22,400 $22,400 $22,400 Calculate NPV for each project. Round your answers to the nearest cent. Do not round your intermediate calculations. Project M $ Project N $ Calculate IRR for each project. Round your answers to two decimal places. Do...
A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 2 3 4 5 Project M -$21,000 $7,000 $7,000 $7,000 $7,000 $7,000 Project N -$63,000 $19,600 $19,600 $19,600 $19,600 $19,600 Calculate NPV for each project. Round your answers to the nearest cent. Do not round your intermediate calculations. Project M $ Project N $ Calculate IRR for each project. Round your answers to two decimal places. Do...
A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 2 3 4 5 Project M $(21,000) $7,000 $7,000 $7,000 $7,000 $7,000 Project N $(63,000) $19,600 $19,600 $19,600 $19,600 $19,600 Calculate NPV for each project. Round your answers to the nearest cent. Do not round your intermediate calculations. Project M $ Project N $ Calculate IRR for each project. Round your answers to two decimal places. Do...
Please show work, don't give me an excel based response, thank you! Consider a capital expenditure project to purchase a...
Please show work, don't give me an excel based response, thank you! Consider a capital expenditure project to purchase and install new equipment with an initial cash outlay of $25,000. The project is expected to generate net after-tax cash flows each year of $6800 for ten years, and at the end of the project, a one-time after-tax cash flow of $11,000 is expected. The firm has a weighted average cost of capital of 12 percent and requires a 3-year payback...
6. Given the following, what is the after-tax cash flow? Assume No Cap. Ex and no...
6. Given the following, what is the after-tax cash flow? Assume No Cap. Ex and no principal payments Cost of goods 100 Depreciation and Amortization 35 Revenues 150 Selling, General, and Admin Exp 5 Tax rate 30% After cash flow = Use this data for the next two problems Sales $100.00 COGS 0.2 General and Admin $15.00 Depreciation $35.00 Interest Expense $35.00 Tax rate 0.25 7. Is the company profitable and by how much? (yes/ no) 8. Does the company...
Suppose your firm is considering investing in a project with the cash flow shown below, that...
Suppose your firm is considering investing in a project with the cash flow shown below, that the required rate of return on projects of this risk class is 11%, and that the maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively Time 0 1 2 3 4 5 Cash flow -$235,000 $65,800 $84,000 $141,000 $122,000 $81,200 . Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?...
Most questions answered within 3 hours.
-
What is responsible for Jupiter's enormous magnetic field?
asked 9 minutes ago -
At the end of the year, a company offered to buy 5,000 units of
a product...
asked 10 minutes ago -
Implement C++ program for each of the following.
Let D = [-48, -14, -8, 0, 1,...
asked 30 minutes ago -
Consider a labor market in which LD = 400 – 4W and LS = 250 +...
asked 44 minutes ago -
Let’s say you are teaching a typically-developing young child
how to eat with a spoon. Describe...
asked 28 minutes ago -
Ask Your Teacher A toy gun uses a spring to project a 5.6-g soft
rubber sphere...
asked 39 minutes ago -
*****DO NOT ANSWER THIS QUESTION IF YOU DON'T
KNOW*******
Question - PERSONAL DEVELOPMENT ESSAY and Detailed...
asked 46 minutes ago -
A certain rifle bullet has a mass of 5.25 g. Calculate the de
Broglie wavelength of...
asked 1 hour ago -
Research new software products that assist in project
communication management. Write a paper summarizing your findings,...
asked 1 hour ago -
the figure below to the left shows a beaker completely filled
with water. then a block...
asked 1 hour ago -
what is the duistribution channels of HUL in india and how they
distribute?
how is this...
asked 1 hour ago -
Batteries play an important role in our everyday lives. From
making many devices mobile, to allowing...
asked 1 hour ago