NPV represents: a. the percentage return of the project b. the percentage change represented by the...
NPV represents:
| a. |
the percentage return of the project |
|
| b. |
the percentage change represented by the project |
|
| c. |
the dollar change in firm value resulting from undertaking a project |
|
| d. |
the dollar profits added to the firm discounting at the cost of capital |
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NPV represents:
a.
the percentage return of the project
b.
the percentage change represented by the...
A proposed project has a positive NPV when evaluated at the company cost of capital. If...
A proposed project has a positive NPV when evaluated at the company cost of capital. If the firm employs debt in its capital structure, will the project remain acceptable after evaluation with the WACC? A) there will be no change in the project's NPV. B) the project may now become unacceptable. C) Yes, using the WACC will increase the NPV. D) No, using the WACC will decrease the NPV. Which one?
1. If the NPV from a project is positive it must be that the internal rate...
1. If the NPV from a project is positive it must be that the internal rate of return is lower than the discount rate used. the project is not acceptable on a risk adjusted basis. this project is preferred to any other mutually exclusive project. accepting the project increases the value of the firm. 5 Question 9 (2 points) 1. Which of the following is not a rationale for using the NPV method in capital budgeting? An NPV of zero...
14) In a before-tax analysis of a project, which of the following would not affect NPV?...
14) In a before-tax analysis of a project, which of the following would not affect NPV? an increase a change in the estimated scrap value of an asset used solely in the project a change in the expected life of the project a change in the discount rate for the project money already spent on designs for the project in the working capital requirements for the project. a. b. c. d. e. 15) Which of the following ratios gives the...
NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is...
NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $30,160, and the project is expected to yield after-tax cash inflows of $4,000 per year for 12 years. The firm has a cost of capital of 15%. a. Determine the net present value (NPV) for the project. b. Determine the internal rate of return (IRR) for the project. c. Wauld you recommend that the firm accept or reject the...
NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is...
NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $58,850, and the project is expected to yield after-tax cash inflows of $6,000 per year for 15 years. The firm has a cost of capital of 14%. a. Determine the net present value (NPV) for the project. b. Determine the internal rate of return (IRR) for the project. C. Would you recommend that the firm accept or reject the...
NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is...
NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $24 comma 30024,300, and the project is expected to yield after-tax cash inflows of $3 comma 0003,000 per year for 1313 years. The firm has a cost of capital of 1212%. a. Determine the net present value (NPV) for the project. b. Determine the internal rate of return (IRR) for the project. c. Would you recommend that the firm...
Project A has an internal rate of return (IRR) of 15 percent. Project B has an...
Project A has an internal rate of return (IRR) of 15 percent. Project B has an IRR of 14 percent. Both projects have a cost of capital of 12 percent. Which of the following statements is most correct? Question 3 options: Both projects have a positive net present value (NPV). Project A must have a higher NPV than Project B. If the cost of capital were less than 12 percent, Project B would have a higher IRR than Project A....
Capital rationing—NPV approach A firm with a 13.3% cost of capital must select the optimal group...
Capital rationing—NPV approach A firm with a 13.3% cost of capital must select the optimal group of projects from those shown in the following table, given its capital budget of $1.20 million. Project Initial investment Damonu $300,000 300,000 300,000 900,000 500,000 100,000 800,000 NPV at 13.3% cost of capital $80,000 9,000 18,000 84,000 71,000 49,000 152,000 The present value of cash inflows for project A is $ . (Round to the nearest dollar.) The present value of cash inflows for...
5. NPV profiles An NPV profile plots a project's NPV at various costs of capital, labeled "A" and "B" in the graph. A p...
5. NPV profiles An NPV profile plots a project's NPV at various costs of capital, labeled "A" and "B" in the graph. A project's NPV profile is shown as follows. Identify the range of costs (ranges labeled "A" and "B") of capital that a firm would use to accept and reject this project. NPV (Dollars) 400 А -200 0 2 4 6 8 10 12 14 16 18 20 COST OF CAPITAL (Percent) The point at which the NPV profile...
1) Suppose that you calculate the NPV of a project, and obtain a value of $100...
1) Suppose that you calculate the NPV of a project, and obtain a value of $100 million dollars. After completing your analysis, you find out that the corporate tax rate will change from 40% to 30%. If nothing else changes, what is the effect of this tax change on the NPV you had calculated? Assume that your company has no debt. a) The new NPV will be lower than $100 b) The new NPV will be higher than $100 c)...
1. If the NPV from a project is positive it must be that the internal rate of return is lower than the discount rate used. the project is not acceptable on a risk adjusted basis. this project is preferred to any other mutually exclusive project. accepting the project increases the value of the firm. 5 Question 9 (2 points) 1. Which of the following is not a rationale for using the NPV method in capital budgeting? An NPV of zero...
14) In a before-tax analysis of a project, which of the following would not affect NPV? an increase a change in the estimated scrap value of an asset used solely in the project a change in the expected life of the project a change in the discount rate for the project money already spent on designs for the project in the working capital requirements for the project. a. b. c. d. e. 15) Which of the following ratios gives the...
NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $30,160, and the project is expected to yield after-tax cash inflows of $4,000 per year for 12 years. The firm has a cost of capital of 15%. a. Determine the net present value (NPV) for the project. b. Determine the internal rate of return (IRR) for the project. c. Wauld you recommend that the firm accept or reject the...
NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $58,850, and the project is expected to yield after-tax cash inflows of $6,000 per year for 15 years. The firm has a cost of capital of 14%. a. Determine the net present value (NPV) for the project. b. Determine the internal rate of return (IRR) for the project. C. Would you recommend that the firm accept or reject the...
Capital rationing—NPV approach A firm with a 13.3% cost of capital must select the optimal group of projects from those shown in the following table, given its capital budget of $1.20 million. Project Initial investment Damonu $300,000 300,000 300,000 900,000 500,000 100,000 800,000 NPV at 13.3% cost of capital $80,000 9,000 18,000 84,000 71,000 49,000 152,000 The present value of cash inflows for project A is $ . (Round to the nearest dollar.) The present value of cash inflows for...
5. NPV profiles An NPV profile plots a project's NPV at various costs of capital, labeled "A" and "B" in the graph. A project's NPV profile is shown as follows. Identify the range of costs (ranges labeled "A" and "B") of capital that a firm would use to accept and reject this project. NPV (Dollars) 400 А -200 0 2 4 6 8 10 12 14 16 18 20 COST OF CAPITAL (Percent) The point at which the NPV profile...
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