Formula for Net Present Value (NPV) calculation
Net present value (NPV) of Project = Sum of [cash flows/ (1+wacc) ^t] - initial cash outflow
Where,
Initial Outflow of Cash for project = -$2300
Cash inflows = $1200, $800 & $2000 for year 1, 2 & 3
Weightage average cost of capital WACC=10%
And time period t = 1, 2, 3,
Therefore,
NPV = $1200/ (1+10%) ^1 +$800/ (1+10%) ^2 + $2000/ (1+10%) ^3 - $2300
= $1,090.91 + $661.16 + $1,502.63 -$2300
= $954.70
Therefore NPV is $954.70
Formula for Net Present Value (NPV) calculation
Net present value (NPV) of Project = - FCF0 + FCF1/ (wacc –g)
Where,
FCF0 = -$116 million
FCF1 = $9 million
Weightage average cost of capital WACC=9%
Perpetual growth rate g = 2%
Therefore,
NPV = -$116 million +$9 million/ (9% -2%)
= -$116 million +$128.57 million
= $12.57 million
Therefore NPV is $12.57 million
The cash flows associated with an investment project are an immediate cost of $2300 and benefits of $1200 in one year,...
The cash flows associated with an investment project are an immediate cost of $1600 and benefits of $500 in one year, $1500 in two years, and $1700 in three years. The cost of capital (WACC) is 10%. What is the project's NPV? Your Answer:
Question 6 (0.2 points) The cash flows associated with an investment project are an immediate cost of $1700 and benefits of $1700 in one year, $1300 in two years, and $500 in three years. The cost of capital ( WACC) is 10%. What is the project's NPV? Your Answer: Answer ► View hint for Question 6
Question 3 (1 point) A firm is considering a potential investment project that would result in an immediate loss in free cash flow of $110 Million, but would generate positive free cash flow of $6 Million next year. The firm expects the free cash flow produced by the project to grow annually at 3% forever. The firm's weighted average cost of capital (WACC) is 6%. What is the NPV of the project? (Enter your answer in millions of dollars rounded...
Question 7 (0.2 points) A firm is considering a potential investment project that would result in an immediate loss in free cash flow of $114 Million, but would generate positive free cash flow of $7 Million next year. The firm expects the free cash flow produced by the project to grow annually at 3% forever. The firm's weighted average cost of capital (WACC) is 9%. What is the NPV of the project? (Enter your answer in millions of dollars rounded...
a firm is considering a potential investment project that would result in an immediate loss in free cash flow of $94 million, but would generate positive free cash flow of $ 7 million next year. The firm expects the free cash flow produced by the project to grow annually at 2 % forever. The firm's weighted average cost of capital is 6 %. What is the NPV of the project?
False Question 3 (1 point) A firm is considering an investment project that costs $250,000 today and $250,000 in one year, but would produce benefits of $50,000 a year, starting in one year, forever. What is the NPV of this investment project if the firm applies an annual discount rate of 7.5% to all future cash flows? Your Answer: Answer Question 4 (1 point) The cash flows associated with an investment project are an immediate cost of $2400 and benefits...
Question 3 (1 point) A firm is considering an investment project that costs $250,000 today and $250,000 in one year, but would produce benefits of $50,000 a year, starting in one year, forever. What is the NPV of this investment project if the firm applies an annual discount rate of 6.3% to all future cash flows? Your Answer: Answer Question 4 (1 point) Rockmont Recreation Inc. is considering a project that has the following cash flow and WACC (weighted average...
Your company is considering a project with the following cash flows: an immediate investment of $100,000 and cash inflows of $25,000 for 5 years (starting in year 1). If your discount rate for this project is 6%, what is the project's NPV? $205,309 $25,000 $5,309 $105,309
Assume a new project requires an initial investment of $6 million dollars, with ensuing cash flows of $1, $3 and $5 million in years 1, 2 and 3. Assuming the company's WACC is 10%, which of the following statements is true? The firm should accept the project, as the IRR is lower than the WACC. The firm should reject the project, as the IRR is higher than the WACC. The firm should accept the project, as the NPV is positive....
Management of TSC, Inc. is evaluating a new $75,000 investment
with the following estimated cash flows:
Year
Cash Flow
1
$
13,000
2
35,000
3
40,000
4
56,000
The firm’s cost of capital is 8 percent and the project will
require that the firm spend $18,000 to terminate the project. Use
Appendix B to answer the question. Use a minus sign to enter a
negative value, if any. Round your answer to the nearest
dollar.
The NPV of the investment...