Homework Answers
Lower discount rate increases the NPV of the project.
Answer is:
Lower discount rate.
Pleaser rate.
Add Answer to:
Question 21 (3.33 points) You have estimated the value of a planned project by finding the...
You have determined the profitability of a planned project by finding the present value of all...
You have determined the profitability of a planned project by finding the present value of all the cash flows from that project. Which of the following statements would cause the project to look less appealing in terms of the present value of those cash flows? The discount rate decreases. The cash flows are extended over a shorter longer period of time, but the total amount of the cash flows remains the same. The discount rate remains constant. Answers b and...
yes or no? Generally, the most difficult part of utilizing the net present value concept is:...
yes
or no?
Generally, the most difficult part of utilizing the net present value concept is: determining whether the discount rate used is higher or lower than the internal rate of return. determining the initial cash outflow required to start a project. computing the net present value once the discount rate and cash flows are determined estimating the future cash flows given the initial investment in the project.
Question 5 1 pts You are analyzing the value of an investment by calculating the present...
Question 5 1 pts You are analyzing the value of an investment by calculating the present value of its expected cash flows. Which of the following would cause the investment to look worse, i.e. have a lower PV? The riskiness of the project's cash flows decreases. The cost of the investment decreases. The discount rate falls. The discount rate rises,
Clifford Company is choosing between two projects. The larger project has an initial cost of $100,000,...
Clifford Company is choosing between two projects. The larger project has an initial cost of $100,000, annual cash flows of $30,000 for 5 years, and an IRR of 15.24%. The smaller project has an initial cost of $50,000, annual cash flows of $16,000 for 5 years, and an IRR of 16.63%. The projects are equally risky. Which of the following statements is CORRECT? Since the smaller project has the higher IRR, the two projects’ NPV profiles will cross, and the...
if the discount rate is 6%, what is the present value of a project that is...
if the discount rate is 6%, what is the present value of a project that is estimated to yeild quarterly cash flows of $2900 for the next 21 years?
Question P8 (5 Points) A project that will provide annual cash flows of $5,000 a year...
Question P8 (5 Points) A project that will provide annual cash flows of $5,000 a year for five years and costs $18,000 today. Show all work: a) At a required rate of return of 10% what is the Net Present Value (NPV) of the project? b) At a required rate of return of 15% what is the Net Present Value (NPV) of the project? c) At what discount rate would you be indifferent between accepting the project and rejecting the...
Question 10 7.5 pts You are considering a project with conventional cash flows. The IRR is...
Question 10 7.5 pts You are considering a project with conventional cash flows. The IRR is 15.7 percent, NPV is -$198, and the payback period is 3.92 years. Which one of the following statements is correct given this information? This project should be accepted based on the internal rate of return. The discount rate used in computing the net present value was less than 15.7 percent. The required rate of return must be greater than 15.7 percent. The discounted payback...
Your firm is evaluating a capital budgeting project. The estimated cash flows appear below. The board...
Your firm is evaluating a capital budgeting project. The estimated cash flows appear below. The board of directors wants to know the expected impact on shareholder wealth. Knowing that the estimated impact on shareholder wealth equates to net present value (NPV), you use your handy calculator to compute the value. What is the project's NPV? Assume that the cash flows occur at the end of each year. The discount rate (i.e., required rate of return, hurdle rate) is 20.1%. (Round...
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)...
If a company must choose between two mutually exclusive investment projects, the best general method to...
If a company must choose between two mutually exclusive investment projects, the best general method to employ for decision-making purposes is: Cash-flow bailout Cash-flow break-even Net Present value (NPV) Discounted payback Accounting (book) rate of return, based on average investment over the life of each project The profitability index (PI) is calculated as: Net present value (NPV) divided by average investment New present value (NPV) divided by initial investment Average investment divided by net present value (NPV) Initial investment divided...
yes
or no?
Generally, the most difficult part of utilizing the net present value concept is: determining whether the discount rate used is higher or lower than the internal rate of return. determining the initial cash outflow required to start a project. computing the net present value once the discount rate and cash flows are determined estimating the future cash flows given the initial investment in the project.
Question 5 1 pts You are analyzing the value of an investment by calculating the present value of its expected cash flows. Which of the following would cause the investment to look worse, i.e. have a lower PV? The riskiness of the project's cash flows decreases. The cost of the investment decreases. The discount rate falls. The discount rate rises,
Question P8 (5 Points) A project that will provide annual cash flows of $5,000 a year for five years and costs $18,000 today. Show all work: a) At a required rate of return of 10% what is the Net Present Value (NPV) of the project? b) At a required rate of return of 15% what is the Net Present Value (NPV) of the project? c) At what discount rate would you be indifferent between accepting the project and rejecting the...
Question 10 7.5 pts You are considering a project with conventional cash flows. The IRR is 15.7 percent, NPV is -$198, and the payback period is 3.92 years. Which one of the following statements is correct given this information? This project should be accepted based on the internal rate of return. The discount rate used in computing the net present value was less than 15.7 percent. The required rate of return must be greater than 15.7 percent. The discounted payback...
Your firm is evaluating a capital budgeting project. The estimated cash flows appear below. The board of directors wants to know the expected impact on shareholder wealth. Knowing that the estimated impact on shareholder wealth equates to net present value (NPV), you use your handy calculator to compute the value. What is the project's NPV? Assume that the cash flows occur at the end of each year. The discount rate (i.e., required rate of return, hurdle rate) is 20.1%. (Round...
Most questions answered within 3 hours.
-
If we observe in a protein solution that DNA is causing a
mixture 260/280 ratio ~0.9,...
asked 3 minutes ago -
Explain the steps involved in making cDNA from mRNA, and how you
would create a cDNA...
asked 4 minutes ago -
A beta (β) particle is described by which of the following?
Select the correct answer below:...
asked 6 minutes ago -
A new machine costs $150,000, lasts 10 years, has an annual
O&M cost of $50,000, and...
asked 10 minutes ago -
A newspaper in a large Midwestern city reported that the
National Association of Realtors said that...
asked 11 minutes ago -
1. Develop a use case diagram for the bank case study described
in Chapter 1. 2....
asked 21 minutes ago -
The phylum Protista has often been referred to as a junk drawer
of classification. Explain what...
asked 28 minutes ago -
The average amount of money spent for lunch per person in the
college cafeteria is $7.09...
asked 30 minutes ago -
You follow the lab procedure and at the end of Part 4C, you used
an average...
asked 49 minutes ago -
Write 250-450 words, about the following: • Analyze how a
servant leader in your organization or...
asked 52 minutes ago -
3. American and Japanese workers can each produce 4 cars a
year. An American worker can...
asked 55 minutes ago -
On October 1, 20X1, a company purchased a piece of land by
agreeing to pay the...
asked 1 hour ago