1. An investment costs $23,958 and will generate cash flow of $6,000 annually for five years....
1. An investment costs $23,958 and will generate cash flow of $6,000 annually for five years. The firm’s cost of capital is 10 percent. a. What is the investment’s internal rate of return? Based on the internal rate of return, should the firm make the investment? b. What is the investment’s net present value? Based on the net present value, should the firm make the investment?
Homework Answers
Add Answer to:
1. An investment costs $23,958 and will generate cash flow of $6,000 annually for five years....
2. An investment costs $23,958 and will generate cash flow of $6,000 annually for five years....
2. An investment costs $23,958 and will generate cash flow of $6,000 annually for five years. The firm’s cost of capital is 6 percent. a. What is the investment’s internal rate of return? Based on the internal rate of return, should the firm make the investment? b. What is the investment’s net present value? Based on the net present value, should the firm make the investment? c. Compare the answers to Problems 1 and 2. Do the net present values...
Management of a firm with a cost of capital of 10 percent is considering a $126,000 investment with annual cash flow of...
Management of a firm with a cost of capital of 10 percent is considering a $126,000 investment with annual cash flow of $52,460 for three years. Use Appendix A and Appendix D to answer the questions. What are the investment’s net present value and internal rate of return? Use a minus sign to enter a negative value, if any. Round your answers for the net present value to the nearest dollar and for the internal rate of return to the...
will like for correct answer! OA frm has two pessible investments with the following cash inflows. Each Investment costs $540, and the cost of capital is seven percent. Use Appendix 8 and Appendi...
will like for correct answer!
OA frm has two pessible investments with the following cash inflows. Each Investment costs $540, and the cost of capital is seven percent. Use Appendix 8 and Appendix D to questions. Assume that the investments are not mutually exclusive and there are no budget restrictions. answer the Cash Inflows Year A 350 160 120 $210 210 210 a. Based on each investment's net present value, which Investment(s) should the firm make? Use a minus sign...
Assignment Questions Q1: Carrefour is expecting its new center to generate the following cash flows: Years...
Assignment Questions Q1: Carrefour is expecting its new center to generate the following cash flows: Years 0 1 2 3 4 5 Initial Investment ($35,000,000) Net operating cash-flow $6,000,000 $8,000,000 $16,000,000 $20,000,000 $30,000,000 a. Determine the payback for this new center. (1 mark) b. Determine the net present value using a cost of capital of 15 percent. Should the project be accepted? (1 mark) Answer: Q2. What is the EAC of two projects: project A, which costs $150 and is...
AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each...
AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each year for the next five years. If the company uses a discount rate of 14 percent on its investments, what is the present value of this investment?
AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each...
AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each year for the next five years. If the company uses a discount rate of 14 percent on its investments, what is the present value of this investment?
Answer each independent question, (a) through (e) below. a. Project A costs $6,000 and will generate annual after-t...
Answer each independent question, (a) through (e) below. a. Project A costs $6,000 and will generate annual after-tax net cash inflows of $2,650 for 5 years. What is the payback period for this investment under the assumption that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) b. Project B costs $6,000 and will generate after-tax cash inflows of $850 in year 1, $1,450 in year 2, $2,500 in year 3, $2,750 in year...
Brett Collins is reviewing his company's investment in a cement plant. The company paid $14,800,000 five...
Brett Collins is reviewing his company's investment in a cement plant. The company paid $14,800,000 five years ago to acquire the plant. Now top management is considering an opportunity to sell it. The president wants to know whether the plant has met original expectations before he decides its fate. The company's discount rate for present value computations is 9 percent. Expected and actual cash flows follow: (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)...
1. An investment that costs $36,500 will produce annual cash flows of $12,210 for a period...
1. An investment that costs $36,500 will produce annual cash flows of $12,210 for a period of 4 years. Given a desired rate of return of 10%, the investment will generate a (Do not round your PV factors and intermediate calculations. Round your answer to the nearest whole dollar): negative net present value of $2,204. positive net present value of $2,204. negative net present value of $38,704. positive net present value of $38,704. 2. The amount of the depreciation tax...
Problem 16-19 Using net present value and internal rate of return to evaluate investment opportun...
Problem 16-19 Using net present value and internal rate of return to evaluate investment opportunities LO 16-2, 16-3 Dwight Donovan, the president of Franklin Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of five years and no salvage value. Project B supports a training program that...
will like for correct answer!
OA frm has two pessible investments with the following cash inflows. Each Investment costs $540, and the cost of capital is seven percent. Use Appendix 8 and Appendix D to questions. Assume that the investments are not mutually exclusive and there are no budget restrictions. answer the Cash Inflows Year A 350 160 120 $210 210 210 a. Based on each investment's net present value, which Investment(s) should the firm make? Use a minus sign...
Answer each independent question, (a) through (e) below. a. Project A costs $6,000 and will generate annual after-tax net cash inflows of $2,650 for 5 years. What is the payback period for this investment under the assumption that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) b. Project B costs $6,000 and will generate after-tax cash inflows of $850 in year 1, $1,450 in year 2, $2,500 in year 3, $2,750 in year...
Brett Collins is reviewing his company's investment in a cement plant. The company paid $14,800,000 five years ago to acquire the plant. Now top management is considering an opportunity to sell it. The president wants to know whether the plant has met original expectations before he decides its fate. The company's discount rate for present value computations is 9 percent. Expected and actual cash flows follow: (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)...
Problem 16-19 Using net present value and internal rate of return to evaluate investment opportunities LO 16-2, 16-3 Dwight Donovan, the president of Franklin Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of five years and no salvage value. Project B supports a training program that...
Most questions answered within 3 hours.
-
Discuss the pros and cons of collaborative software such
as SameTime. Does it increase productivity? What...
asked 9 minutes ago -
1. Are all good samples random?
2. Magazines often report surveys giving statistics such as “63%...
asked 4 minutes ago -
Buying your in-laws a gift because it’s expected is
due to the ____________ motive of gift-giving....
asked 12 minutes ago -
A large cable company reports the following.
80% of its customers subscribe to its cable TV...
asked 11 minutes ago -
Calculate the expected value, the variance, and the standard
deviation of the given random variable X....
asked 55 minutes ago -
A hospital performs 100 surgeries per week. The probability that
complications after surgery occur is 10%....
asked 1 hour ago -
1 point) Given the significance level α=0.01 find the following:
(a) left-tailed z value z= (b)...
asked 53 minutes ago -
Assuming you are the head of the software development unit at
Cyber.Soft, explain and justify why...
asked 19 minutes ago -
Magnesium and nitrogen react in a combination reaction to
produce magnesium nitride. 3 Mg + N2...
asked 27 minutes ago -
Two electrons are initially at rest separated by a distance of
2nm. At time t=0, they...
asked 25 minutes ago -
A martial artist is practicing breaking 5 boards. He is able to
break aboard with probability...
asked 33 minutes ago -
The rate constant of a first-order reaction is 2.95 × 10−4 s−1
at 350.° C. If...
asked 36 minutes ago