Leisure Incorporated is evaluating a project that requires an initial investment of $5,000 depreciated straight line...
Leisure Incorporated is evaluating a project that requires an initial investment of $5,000 depreciated straight line over 5 years. The project has the following cash flows and abandonment values are the project's book values at various points throughout its physical life. What is the project's optimal NPV? The firm cost of capital is 10%.
| 0 | 1 | 2 | 3 | 4 | 5 | |
| CASH FLOWS | ($5,000) | $1,000 | $2,000 | $3,000 | $1,500 | $1,000 |
Group of answer choices
$1,461
$1,523
-$455
$1,319
Homework Answers
| Year | Cash inflows | Present value factor | Present value of cash inflows |
| 1 | 1000 | 0.9091 | 909 |
| 2 | 2000 | 0.8264 | 1653 |
| 3 | 3000 | 0.7513 | 2254 |
| 4 | 1500 | 0.6830 | 1025 |
| 5 | 1000 | 0.6209 | 621 |
| Total | 6461 |
| Net present value (NPV) = Total present value of cash inflows - Initial cost = 6461 - 5000 | 1461 |
Add Answer to:
Leisure Incorporated is evaluating a project that requires an
initial investment of $5,000 depreciated straight line...
Albert Co. is considering a four-year project that will require an initial investment of $5,000. The...
Albert Co. is considering a four-year project that will require an initial investment of $5,000. The base-case cash flows for this project are projected to be $15,000 per year. The best-case cash flows are projected to be $22,000 per year, and the worst-case cash flows are projected to be -$1,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a...
Shan Co. is considering a four-year project that will require an initial investment of $5,000. The base-case cash flows...
Shan Co. is considering a four-year project that will require an initial investment of $5,000. The base-case cash flows for this project are projected to be $15,000 per year. The best-case cash flows are projected to be $22,000 per year, and the worst-case cash flows are projected to be - $1,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is...
Galbraith Co. is considering a four-year project that will require an initial investment of $5,000. The...
Galbraith Co. is considering a four-year project that will require an initial investment of $5,000. The base-case cash flows for this project are projected to be $12,000 per year. The best-case cash flows are projected to be $19,000 per year, and the worst-case cash flows are projected to be -$3,000 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a...
8. Abandonment options Shan Co. is considering a four-year project that will require an initial investment...
8. Abandonment options Shan Co. is considering a four-year project that will require an initial investment of $15,000. The base-case cash flows for this project are projected to be $15,000 per year. The best-case cash flows are projected to be $22,000 per year, and the worst-case cash flows are projected to be -$1,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that...
Herman Co. is considering a four-year project that will require an initial investment of $15,000. The...
Herman Co. is considering a four-year project that will require an initial investment of $15,000. The base-case cash flows for this project are projected to be $14,000 per year. The best-case cash flows are projected to be $21,000 per year, and the worst case cash flows are projected to be - $2,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cas think that there is a 25% probability...
8. Abandonment options Albert Co. is considering a four-year project that will require an initial investment...
8. Abandonment options Albert Co. is considering a four-year project that will require an initial investment of $12,000. The base-case cash flows for this project are projected to be $15,000 per year. The best-case cash flows are projected to be $22,000 per year, and the worst-case cash flows are projected to be -$1,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that...
8. Abandonment options Shan Co. is considering a four-year project that will require an initial investment...
8. Abandonment options Shan Co. is considering a four-year project that will require an initial investment of $15,000. The base-case cash flows for this project are projected to be $14,000 per year. The best-case cash flows are projected to be $26,000 per year, and the worst-case cash flows are projected to be - $4,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think...
A project requires an initial investment of $850,000 depreciated straight-line to $0 in 10 years. The...
A project requires an initial investment of $850,000 depreciated straight-line to $0 in 10 years. The investment is expected to generate annual sales of $571,500 with annual costs of $250,000 for 10 years. Assume a tax rate of 30% and the NPV of $250,000. What is a discount rate of the project?
8. Abandonment options Acme Co. is considering a four-year project that will require an initial investment of $15,...
8. Abandonment options Acme Co. is considering a four-year project that will require an initial investment of $15,000. The base-case cash flows for this project are projected to be $12,000 per year. The best-case cash flows are projected to be $19,000 per year, and the worst-case cash flows are projected to be -$3,000 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that...
8. Abandonment options Herman Co. is considering a four-year project that will require an initial investment...
8. Abandonment options Herman Co. is considering a four-year project that will require an initial investment of $7,000. The base-case cash flows for this project are projected to be $12,000 per year. The best-case cash flows are projected to be $20,000 per year, and the worst-case cash flows are projected to be -$1,000 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that...
Albert Co. is considering a four-year project that will require an initial investment of $5,000. The base-case cash flows for this project are projected to be $15,000 per year. The best-case cash flows are projected to be $22,000 per year, and the worst-case cash flows are projected to be -$1,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a...
Shan Co. is considering a four-year project that will require an initial investment of $5,000. The base-case cash flows for this project are projected to be $15,000 per year. The best-case cash flows are projected to be $22,000 per year, and the worst-case cash flows are projected to be - $1,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is...
Galbraith Co. is considering a four-year project that will require an initial investment of $5,000. The base-case cash flows for this project are projected to be $12,000 per year. The best-case cash flows are projected to be $19,000 per year, and the worst-case cash flows are projected to be -$3,000 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a...
8. Abandonment options Shan Co. is considering a four-year project that will require an initial investment of $15,000. The base-case cash flows for this project are projected to be $15,000 per year. The best-case cash flows are projected to be $22,000 per year, and the worst-case cash flows are projected to be -$1,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that...
Herman Co. is considering a four-year project that will require an initial investment of $15,000. The base-case cash flows for this project are projected to be $14,000 per year. The best-case cash flows are projected to be $21,000 per year, and the worst case cash flows are projected to be - $2,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cas think that there is a 25% probability...
8. Abandonment options Albert Co. is considering a four-year project that will require an initial investment of $12,000. The base-case cash flows for this project are projected to be $15,000 per year. The best-case cash flows are projected to be $22,000 per year, and the worst-case cash flows are projected to be -$1,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that...
8. Abandonment options Shan Co. is considering a four-year project that will require an initial investment of $15,000. The base-case cash flows for this project are projected to be $14,000 per year. The best-case cash flows are projected to be $26,000 per year, and the worst-case cash flows are projected to be - $4,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think...
8. Abandonment options Acme Co. is considering a four-year project that will require an initial investment of $15,000. The base-case cash flows for this project are projected to be $12,000 per year. The best-case cash flows are projected to be $19,000 per year, and the worst-case cash flows are projected to be -$3,000 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that...
8. Abandonment options Herman Co. is considering a four-year project that will require an initial investment of $7,000. The base-case cash flows for this project are projected to be $12,000 per year. The best-case cash flows are projected to be $20,000 per year, and the worst-case cash flows are projected to be -$1,000 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that...
Most questions answered within 3 hours.
-
List and describe five employee evaluation perceptual
errors.
asked 1 minute ago -
Part A:
Write a generic Matlab code that generates delayed (shifted) Unit
Impulse function.
Part B:...
asked 3 minutes ago -
Identify which of the following statements about cost centers
and decentralization is true.
Group of answer...
asked 6 minutes ago -
A mass M slides upward along a rough plane surface inclined at
angle \Theta\: Θ =...
asked 35 minutes ago -
After the DCCT results, the revised Am. Diabetes Assoc.
recommendations stated that sucrose
can be used...
asked 22 minutes ago -
An RLC circuit has a capacitance of 0.29 uF. A. What inductance
will produce a resonance...
asked 29 minutes ago -
A ball is thrown from a point 1.0 m above the ground. The
initial velocity is...
asked 29 minutes ago -
Design (draw) a 4 * 4-bit memory system (building block) with
2-bit address bus and 4-bit...
asked 42 minutes ago -
A weak acid (HA) has a pKa of 4.011. If a solution of this acid
has...
asked 49 minutes ago -
What is the Structure of stratified sampling vs cluster
sampling?
asked 58 minutes ago -
An alpha particle is emitted from an unstable nucleus and
travels in a magnetic field of...
asked 1 hour ago -
3
3. Complete the balance sheet and sales information
in the table that follows J. White...
asked 1 hour ago