You are purchasing a factory at $550,000. Your projected cash flow streams from the factory will be $135,000 in year 1, $152,000 in year 2, and $285,000 in year 3. What is the rate of return on this factory investment?
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A: Net present value is difference between cash flow and initial cost.
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Q: A factory costs $28000. You forecast that it will produce cash inflows of $80000 in year 1, $140000…
A: The provided information are: Discount rate (r) = 12% = 0.12 Cash outflow = $28000
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A:
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A: The value of factory can be determined with the help of below expression:
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Q: The payback period would be?
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You are purchasing a factory at $550,000. Your projected cash flow streams from the factory will be $135,000 in year 1, $152,000 in year 2, and $285,000 in year 3. What is the
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- Assume a company is going to make an investment of $450,000 in a machine and the following are the cash flows that two different products would bring in years one through four. Which of the two options would you choose based on the payback method?If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
- You are considering opening a new plant. The plant will cost $100.0 million upfront. After that, it is expected to produce profits of $30.0 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8.0%. Should you make the investment? Calculate the IRR. Use the IRR to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.You are considering opening a new plant. The plant will cost $98.2 million upfront. After that, it is expected to produce profits of $30.2 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 6.6%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. Calculate the NPV of this investment opportunity if your cost of capital is 6.6%. The NPV of this investment opportunity is $ million. (Round to one decimal place.)You are considering opening a new plant. The plant will cost $98.6 million upfront. After that, it is expected to produce profits of $29.9 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8.1%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.
- You are looking at an investment that will pay you $22,995 in year 2, $43,270 in year 4 and $41,525 in year 6. If your required return is 8.73%, what is the most you should pay for the investment? (In other words, how much is the project worth today?)You are considering an investment in a clothes distributer. The company needs $105,000 today and expects to repay you $120,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 17%. What does the IRR rule say about whether you should invest? What is the IRR of this investment oppurtunity? The IRR of this investment opppurtunity is ____%A factory costs $28000. You forecast that it will produce cash inflows of $80000 in year 1, $140000 in year 2, and $220000 in year 3. The discount rate is 12% 1. what is the value of the factory? 2. Is the factory a good investment? Y or N
- You are considering opening a new plant. The plant will cost $103.2 million upfront. After that, it is expected to produce profits of $30.9 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8.6%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. If your cost of capital is 8.6%, the NPV of this investment opportunity is S Should you make the investment? (Select the best choice below.) O A. Yes, because the project will generate cash flows forever. O B. No, because the NPV is not greater than the initial costs. O C. Yes, because the NPV is positive. O D. No, because the NPV is less than zero. million. (Round to one decimal place.) The IRR of the investment is %. (Round to two decimal places.) The maximum deviation allowable in the cost of capital is %. (Round to two…A company is considering investing in a new project that requires an initial investment of $1,000,000. The projected cash flows from the project are as follows: Year 1: $300,000 Year 2: $400,000 Year 3: $500,000 Year 4: $600,000 The company's required rate of return for similar projects is 12%. What is the Net Present Value (NPV) of the project? What is the Internal Rate of Return (IRR) of the project? YOU MUST SHOW CALCULATIONS TO BACK UP YOUR SELECTION. -$100,000// 12% $250,000 // 10% $250,000 // 14% $350,000 // 14% $50,000 // %14Pete Nunn is trying to decide whether to go ahead with an investment opportunity that costs $60,000. The expected incremental cash inflows are $32,000, while the expected incremental cash outflows are $17,000. What is the payback period?