Consider a project that requires an initial investment of $98,000 and will produce a single cash flow of $155,000 in 6 years. a. What is the NPV of this project if the 6-year interest rate is 4.9% (EAR)? b. What is the NPV of this project if the 6-year
Consider a project that requires an initial investment of and will produce a single cash flow of in years.
a. What is the NPV of this project if the -year interest rate is (EAR)?
b. What is the NPV of this project if the -year interest rate is (EAR)?
c. What is the highest -year interest rate such that this project is still profitable?
Homework Answers
Add Answer to:
Consider a project that requires an initial investment of $98,000 and will produce a single cash flow of $155,000 in 6 years. a. What is the NPV of this project if the 6-year interest rate is 4.9% (EAR)? b. What is the NPV of this project if the 6-year
please solve this problem showing the calculations steps. Thank you Consider a project that requires an...
please solve this problem showing the calculations
steps. Thank you
Consider a project that requires an initial investment of $99,000 and will produce a single cash flow of $146,000 in 5 years. a. What is the NPV of this project if the 5-year interest rate is 5.2% (EAR)? b. What is the NPV of this project if the 5-year interest rate is 9.8% (EAR)? c. What is the highest 5-year interest rate such that this project is still profitable? a....
You are considering a project that requires an initial investment of $98,000 with a cost of...
You are considering a project that requires an initial investment of $98,000 with a cost of capital of 15%. You expect the project to have a five-year life, and produce cash flows of $19,000 in year 1, $32,000 in year 2, $64,000 in year 3, $26,000 in year 4 and $10,000 in year 5. What is this project’s net present value? A. $3,172 B. $ 5,029 C.$7,076 D. $4,637
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...
A project requires an initial investment of $100,000 and is expected to produce a cash inflow...
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $27,500 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 10%. Ignore inflation. a. Calculate project NPV for each company. (Do not...
Problem 6-15 Project NPV and IRR A project requires an initial investment of $100,000 and is...
Problem 6-15 Project NPV and IRR A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $26,700 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 9%. Ignore inflation. a. Calculate project...
Organic Produce is considering a new 6-year expansion project that requires an initial fixed asset investment...
Organic Produce is considering a new 6-year expansion project that requires an initial fixed asset investment of $5.876 million. The fixed asset will be depreciated straight-line to zero over its 6-year tax life, after which time it will be worthless. The project is estimated to generate $5,328,000 in annual sales, with costs of $2,131,200. The tax rate is 32 percent. What is the annual operating cash flow for this project?
A project requires an initial cash outflow of $16000. The investment is expected to produce net...
A project requires an initial cash outflow of $16000. The investment is expected to produce net cash inflows of $2000 each year for eleven years. The internal rate of return on this investment to the nearest tenth of a percent is A. 5.7% B. 6.0% C. 5.9% D. 5.2%
Consider a project with free cash flow in one year of $138,445 or $189,120, with either outcome being equally likely. The initial investment required for the project is $95,000, and the project's cost of capital is 25%. The risk-free interest rate is 7%.
Consider a project with free cash flow in one year of $138,445 or $189,120, with either outcome being equally likely. The initial investment required for the project is $95,000, and the project's cost of capital is 25%. The risk-free interest rate is 7%. (Assume no taxes or distresscosts.) a. What is the NPV of this project?b. Suppose that to raise the funds for the initial investment, the project is sold to investors as an all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised...
Fitzgerald Industries has a new project available that requires an initial investment of $4.9 million. The...
Fitzgerald Industries has a new project available that requires an initial investment of $4.9 million. The project will provide unlevered cash flows of $846,000 per year for the next 20 years. The company will finance the project with a debt-value ratio of .35. The company’s bonds have a YTM of 6.7 percent. The companies with operations comparable to this project have unlevered betas of 1.13, 1.06, 1.28, and 1.23. The risk-free rate is 4.1 percent and the market risk premium...
A project requires an initial investment of $8 million, and is anticipated to generate a single...
A project requires an initial investment of $8 million, and is anticipated to generate a single cash flow of $16 million in 2 years. What is the internal rate of return on the project? Enter answer in percents, accurate to two decimal places.
please solve this problem showing the calculations
steps. Thank you
Consider a project that requires an initial investment of $99,000 and will produce a single cash flow of $146,000 in 5 years. a. What is the NPV of this project if the 5-year interest rate is 5.2% (EAR)? b. What is the NPV of this project if the 5-year interest rate is 9.8% (EAR)? c. What is the highest 5-year interest rate such that this project is still profitable? a....
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $27,500 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 10%. Ignore inflation. a. Calculate project NPV for each company. (Do not...
Problem 6-15 Project NPV and IRR A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $26,700 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 9%. Ignore inflation. a. Calculate project...
Most questions answered within 3 hours.
-
(Expected rate of return and risk) Carter Inc. is evaluating a
security. Calculate the investment’s expected...
asked 2 hours ago -
What specific indicators can point to lack of progress for
African Americans in American society?
asked 3 hours ago -
1-The Electrons in a beam are moving at 2.7×108 m/s in an
electric field of 15000...
asked 3 hours ago -
A gas tank is a vertical cylinder. It has a radius of 1m, a
height of...
asked 4 hours ago -
Accent Software faces the following conditions. All of these
support Accent’s use of a market-penetration pricing...
asked 5 hours ago -
A mathematically inclined friend emails you the following
instructions: "Meet me in the cafeteria the first...
asked 5 hours ago -
A monopoly sells in two countries . The demand curves in the two
countries are p1...
asked 6 hours ago -
A .15kg rubber ball is bounced off a wall. Before hitting the
wall, the ball moves...
asked 6 hours ago -
A manufacturing company preparing to build a new plant is
considering three potential locations for it....
asked 6 hours ago -
B. If compound Y has approximately the same values of solubility
in toluene as compound X,...
asked 7 hours ago -
Oscar Inc. has inventory in Japan valued at 39,051,000 Yen one
year ago. One year ago...
asked 7 hours ago -
If Canada suffered from "fundamental disequilibrium," and its
government choose not to devalue its currency, a...
asked 7 hours ago