Suppose that cash flows of a project are given as follows: Year 0: Costs: $150,000. Year 1: Costs: $10,000. Savings: $60,000. Year 2: Costs: $10,000. Savings: $70,000. Year 3: Costs: $10,000. Savings: $90,000. Year 4: Costs: $30,000. Savings: $90,000. It is known that MARR is 10% and all cash flows occur throughout the year, what is the project's Payback Period? O 2 Years 2.5 Years O 3 Years 3.5 Years

Suppose that cash flows of a project are given as follows: Year 0: Costs: $150,000. Year 1: Costs: $10,000. Savings: $60,000. Year 2: Costs: $10,000. Savings: $70,000. Year 3: Costs: $10,000. Savings: $90,000. Year 4: Costs: $30,000. Savings: $90,000. It is known that MARR is 10% and all cash flows occur throughout the year, what is the project's Payback Period? O 2 Years 2.5 Years O 3 Years 3.5 Years

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose you are given the cash flows for a project with the following cash flows. The cost of capital of all projects is 10%. Calculate the payback period and the discounted payback period. Year: 0 1 2 3 4 5 Cash flow: ($14,000) $6,000 $6,000 $6,000 $6,000 $6,000
A project has estimated annual net cash flows of $80,000. It is estimated to cost $600,000. Determine the cash payback period. Round your answer to one decimal place.
Suppose a project costs $2,200 and produces cash flows of $640, $800 and $1,900 in each of the first three years, respectively. What is the IRR of the pioject? O 17.27% O 50.61% O 28.79% O 19.72% O 17.91%
Susmel Inc. is considering a project that has the following cash flow data. The project's regular payback period is ________ years. Show 2 decimals. Year 0 1 2 3 Cash Flows -$500 $150 $200 $300
A project has the following cash flows; cost =10,000, years 1-5 incoming cash flows are $5,000 each, and the WACC = 10%. What is the PI?
Financial Manager of Timmy Company is considering two projects (project A and project H), which have cash flows as follows: Year Cash Flow of Project A (in $) Cash Flow of Project H (in $) 0 -100 -100 1 10 70 2 60 50 3 80 20 Timmy Company’s cost of capital is 10 percent. Calculate payback, NPV, IRR, and MIRR for both projects. (Please have a step by step format to your answer with explainations. Thanks (=)
The following table contains the estimated cash flows of a project. Assume the appropriate discount rate (hurdle rate) is 14%. Answer the following questions: Year Operating Cash Flow 0 -$20,000 1 $7,000 2 $8,000 3 $9,000 4 $4,000 c. What is the IRR of project 1?
Carland, Incorporated, has a project available with the following cash flows. If the required return for the project is 7.9 percent, what is the project's NPV? Year Cash Flow 0 -$ 258,000 1 66, 300 2 90, 400 3 117,800 4 70,900 5-12,000 $35, 378.61 $18, 968.78 $27, 173.69 $15, 173.69 $13,276.98
You are given the following cash flows for a project. Assuming a cost of capital of 12.84 percent. determine the profitability index for this project. Year 0 1 2 3 4 5 O 14981 O 1.68/7 O1.7508 1.6245 1.5613 Cash Flow -$1,115.00 $554.00 $622.00 $648 00 $426.00 $216.00
A project has the following cash flows. Determine the exact ROR for this project. Item Cash Flow First cost, $ 250,000 Annual Revenues, $/year 16,000 Additional Revenue, year 20, $ 600,000 O&M costs, $/year 2,500 Life, years 20
You are considering the following two projects and can only take one. Your cost of capital is 11.3%. The cash flows for the two projects are as follows ($ million): Year 2 Year 3 Year 4 Year 0 - $100 Year 1 $23 $29 $39 $51 - $100 $51 $39 $29 $21 Project A B a. What is the IRR of each project? b. What is the NPV of each project at your cost of capital? c. At what cost of capital are you indifferent between the two projects? d. What should you do?
Estimated cash inflows for project A are as follows , respectively ; $ 10.000 , 7.000 ,9.000,15.000,8.000 and 10.000 . If the investment cost is $ 40.000 and the capital cost is % 10 , what is the profitability index -1 of the project ? a.1,31 b.2,13 c1,06 d.0,16 e.2,31

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