(There are 3 parts to this problem. Scroll down.) | |||||||||
Year | Cash Flow | ||||||||
0 | -40 | ||||||||
1 | 0 | ||||||||
2 | 4 | ||||||||
3 | 8 | ||||||||
4 | 11 | ||||||||
5 | 13 | ||||||||
6 | 14 | ||||||||
a. Calculate the net present value of this investment using a discount rate of 9%. | (ref: Chap12 Practice Prob5) |
(There are 3 parts to this problem. Scroll down.) Year Cash Flow 0 -40 1 0...
1. (4 pts) The following cash flows (in $000) are estimated for a business investment. (ref: Chap12 Practice Prob1) Year Cash Flow 0 -40 1 0 2 3 3 7 4 8 5 10 6 12 b. Explain this ARR value with regard to the time value of money. need formulas too
3. Consider Table 2 Table 2 Year 3 Year 4 Cash flow Year 2 Year 0 Year 1 Cash flovw Cash flow Cash flow 70 Cash flow Project 80 70 30 -150 0.24 Interest Tax Shield 0.75 (a)Consider Table 2. Calculate the net present value of the project assuming it is all-equity financed. The required return on unlevered equity is 15%. (b)Consider Table 2. Assume for now that the project is financed using equal parts debt and equity. The cost...
Consider the following Cash Flow: Year 0 (595.00) 1 $ 250.00 2 $ 200.00 3 $ 150.00 4 $ 100.00 Cash Flow 5 $ 50.00 What is the Rate of Return for this investment? Between 0% and 196. Between 18% and 19%. Between 8% and 9%. 16% and 17%. Between 10% and 11%.
Problem 2 (15 pts): Given the cash flow described in the table below Year 0 Year 1 Year 2 18 -3 Revenue Operating cost Capital Cost 18 Year Year 3 4 20 22 -3 -3 Year 5 24 -4 Year Year 6 7 26 28 -5 -8 Year 8 30 .9 -20 -15. Tax Cost -2 -3 -4 -5 -6 -6 -7 Project Cash Flow DCF @ 10% a) What is the projected cash flow? (Fill up the corresponding row...
The following cash flows (in $000) are estimated for a business investment where $35,000 is initially invested. Year Cash Flow 0 -35 1 0 2 3 3 7 4 8 5 10 6 12 a. Calculate the net present value of this investment using a discount rate of 8%. b. If other investment alternatives could earn 8%, should the investment described in the problem be undertaken? c. Calculate the actual internal rate of return of this investment.
Problem Set 2 1, For each of the following annuities, calculate the annual cash flow. Cash Flow Present Value Years $32,400 6 $29,650 8 $159,500 20 $230,700 22 Interest Rate 10% 8% 13% 12% Interest Rate b, For each of the following annuities, calculate the present value. Cash Flow Present Value Years $2,250 $1,355 $12,205 $31,400 7 9 14 30 8% 7% 9% 11% Interest Rate c. For each of the following annuities, calculate the annuity payment. Cash Flow Future...
Consider the following two projects: 763,088.5469 Proiect Year 0 Year 1 Year 2 Year 3 Year 4 Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow - 100 40 50 60 N/A - 7330 30 Discount Rate 0.14 0.14 30 The net present value (NPV) of project A is closest to: O A 17.6 O B. 15.5 O C. 14.1 OD 35.1 What is the internal rate of return (IRR) of an investment that requires an initial investment of...
Problem 2 of 3.( 1 40 points) Cash flow diagrams required in area below given CF For the given cash flow, determine the unknown quantity, Q. ifi = 8%. Q is eq given series. Hint, discount all cash flows to year 4. Q, it i= 8%. Q is equivalent to the 400 500 200 200 200 200 % 1 1 2 3 4 5 6 7 8 9 10
Year Cash Flow 0 −$7,100 1 5,500 2 2,600 3 2,100 a. What is the profitability index for the cash flows if the relevant discount rate is 11 percent? b. What is the profitability index for the cash flows if the relevant discount rate is 14 percent? c. What is the profitability index for the cash flows if the relevant discount rate is 25 percent?
16) You are offered an investment that will pay the following cash flows at the end of each of the next five years at a cost of $800. What is the Net Present Value (NPV) if the required rate of return is 12% per year? Period Cash Flow 0 $0 1 $100 2 $200 3 $300 4 $400 5 $500 Remember that Excel’s NPV function doesn't really calculate the net present value. Instead, it simply calculates the present value of...