ZuoTi.Pro
Question

XYZ will invest $160,000 in a project that will produce the cash flow shown below The cost of capital is 11 percent. Should the project be undertaken? Cash Flow S54,000 66,000 (60,000) 57,000 120,000 Y ear 2

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
CALCULATION OF THE PRESENT VALUE OF THE INVESTMENT PROJECT
Year Cash Flow (A) PVF of $ 1 @ 11% (B) Present Value (A X B)
0 -160000                               1.00000 $                               -1,60,000
1 54000                               0.90090 $                                     48,649
2 66000                               0.81162 $                                     53,567
3 -60000                               0.73119 $                                   -43,871
4 57000                               0.65873 $                                     37,548
5 120000                               0.59345 $                                     71,214
Total   $                                       7,106
Present Value of the investment in project Is $ 7,106 is positive it means the
this project is profitable so it can be accepted
Answer = Yes project should be undertaken because the Net present value is positive
0 0
Add a comment
Know the answer?
Add Answer to:
XYZ will invest $160,000 in a project that will produce the cash flow shown below The...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Aerospace Dynamics will invest $130,000 in a project that will produce the following cash flows. The...

    Aerospace Dynamics will invest $130,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. (Note that the fourth year's cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods Year 1 Cash Flow $ 40,000 50.000 57.000 (54.000) 110,000 a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Do...

  • 1. Aerospace Dynamics will invest $158,000 in a project that will produce the following cash flows....

    1. Aerospace Dynamics will invest $158,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. (Note that the fourth year’s cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.    Year Cash Flow 1 $ 49,000 2 59,000 3 50,000 4 (54,000 ) 5 110,000 a. What is the net present value of the project? (Negative amount should...

  • Skyline Corp. will invest $180,000 in a project that will not begin to produce returns until...

    Skyline Corp. will invest $180,000 in a project that will not begin to produce returns until the end of the 5th year. From the end of the 5th year until the end of the 12th year (8 periods), the annual cash flow will be $43,000. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Calculate the net present value if the cost of capital is 10...

  • Twelve Inch Toes Corp. will invest $205,000 in a project that will not begin to produce...

    Twelve Inch Toes Corp. will invest $205,000 in a project that will not begin to produce returns until the third year. From the end of the third year until the end of the tenth year (8 periods), the annual cash flow will be $53,000. a. Calculate the net present value if the cost of capital is 12 percent. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answer to the nearest whole...

  • Aerospace Dynamics will invest $125,000 in a project that will produce the following cash flows. The...

    Aerospace Dynamics will invest $125,000 in a project that will produce the following cash flows. The cost of capital is 9 percent. (Note that the fourth year’s cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.    Year Cash Flow 1 $ 35,000 2 55,000 3 48,000 4 (45,000 ) 5 90,000 a. What is the net present value of the project? (Negative amount should be...

  • Skyline Corp. will invest $250,000 in a project that will not begin to produce returns until the end of the 3rd year. Fr...

    Skyline Corp. will invest $250,000 in a project that will not begin to produce returns until the end of the 3rd year. From the end of the 3rd year until the end of the 12th year (10 periods), the annual cash flow will be $54,000. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.    a. Calculate the net present value if the cost of capital is...

  • A project requires an initial investment of $200,000 and expects to produce a cash flow before...

    A project requires an initial investment of $200,000 and expects to produce a cash flow before taxes of $120,000 per year for two years (i.e., cash flows will occur at t = 1 and t = 2). The corporate tax rate is 21 percent. The assets will depreciate using the MACRS year 3 schedule: (t = 1: 33%); (t = 2: 45%); (t = 3: 15%); (t = 4: 7%). The company's tax situation is such that it can use...

  • XYZ is considering a project with an annual cash flow of GH¢ 80,000. The project would...

    XYZ is considering a project with an annual cash flow of GH¢ 80,000. The project would have a 10-year life, and the company uses a discount rate of 8 percent. (DF@ N=10, 8% = 6.710). What is the maximum amount the company could invest in the project and have the project still be acceptable (rounded)?\ Select one: a. GH¢ 406,420. b. GH¢ 800,000. c. GH¢ 536,800. d. GH¢ 727,208. The ABC Company has fixed costs of GH¢150,000 and variable costs...

  • 11. Beta Co. is considering two mutually exclusive projects to invest in per the Cash Flows...

    11. Beta Co. is considering two mutually exclusive projects to invest in per the Cash Flows and IRRs below. The Discount Rate (MARR) for Beta Corp. is 18% APR compounded annually. Project #1 Year Cash Flow -$14,000 +$17,000 +$1,400 IRR: 29.17% Project #2 Y ear: Cash Flow: IRR: -$10,000 +$13,000 +S400 33.01% Which of the two Projects (if any) should Beta invest in? (Show your work and the basis for your answer. No credit for answer only!) (5 Pts)

  • As a project manager of UMBRELLA CORPORATION you are evaluating a new project, the cash flow...

    As a project manager of UMBRELLA CORPORATION you are evaluating a new project, the cash flow of which appear as below, and that your company uses a require rate of return of 7% to evaluate on the project such as these: Year Cash Flows (RM20,000) RM5.000 RM4,000 RM6,000 RM7,000 RM8.000 FIN2102 (F) Page 3 of 4 i. What is the project's payback period? (4 marks) ii. What is the project's net present value? (5 marks) iii. Should your company accept...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT