Problem 24-14 Abandonment Value [LO5] We are examining a new project. We expect to sell 5,300 units per year at $67 net cash flow apiece for the next 10 years. In other words, the annual cash flow is projected to be $67 × 5,300 = $355,100. The relevant discount rate is 16 percent, and the initial investment required is $1,520,000. X a. What is the base-case NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. After the first year, the project can be dismantled and sold for $1,240,000. If expected sales are revised based on the first year's performance, below what level of expected sales would it make sense to abandon the project? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a. NPV b. Level of expected sales
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- QUESTION 5 Garfield Inc is considering a new project that requires an initial investment of $39500 and will generate a net income of $5242 per year, if the project's profitability index is 1.3, the present value of the project's future cash flows is $ Round to the nearest dollar.QUESTION 5 GoGo Inc. is considering a new project that requires an initial investment of $36140 and will generate a net income of $5518 per year, if the project's profitability index is 2.8, the present value of the project's future cash flows is $ Round to the nearest dollar.Question 20 Solar Energy is currently examining a project that will produce cash inflows of $21,405 a year for two years followed by $12,390 in year 3. The cost of the project is $38,716. What is the profitability index of the project if the discount rate is 11 percent? A Moving to another question will save this response.
- Question 23 Haig Aircraft is considering a project that has an up-front cost paid today at t = 0. The project will generate positive cash flows of $47,212 a year at the end of each of the next 3 years. The project's NPV is $40,927 and the company's WACC is 14.4%. What is the project's regular payback? 1.74 years 2.64 years O 2.04 years 1.44 years 2.34 yearsQUESTION 1 XYZ is evaluating a project that would require an initial investment of $72,300.00 today. The project is expected to produce annual cash flows of $8,400.00 each year forever with the first annual cash flow expected in 1 year. The NPV of the project is $7,500.00. What is the IRR of the project? O 11.62% (plus or minus 0.02 percentage points) 10.53% (plus or minus 0.02 percentage points) 10.37% (plus or minus 0.02 percentage points) 12.96% (plus or minus 0.02 percentage points) O None of the above is within 0.02 percentage points of the correct answer#11 NPV A proposed nuclear power plant will cost 2.2 to build and then will produce cash flow of 3 million per year for 15 years. After that period (in 15 years) it must be decommissioned at a cost of 900 million. What is the project NPV if the discount rate is 5%? What is the discount rate at 18%?
- Problem 10.2 Kingston, Inc. management is considering purchasing a new machine at a cost of $4,141,424. They expect this equipment to produce cash flows of $780,365, $825,291, $928,252, $1,072,646, $1,304,417, and $1,199,888 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.) The NPV is Click if you would like to Show Work for this question: Open Show WorkQuestion 52 RESOURCES Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $125,368. It will have a useful life of 4 years and no salvage value. Annual Cash inflows would increase by $79,600, and annual cash outflows would increase by $39,700 The company's required rate of return is 10% Click here toview PW table. Calcul ate the net present value on this project. (If the net present value is negative, use elther a negative sign preceding the number eg -45 or parentheses eg (45) Round present value answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) uestion 3 Net present value uestion 7 Whether this project should be accepted?Project Evaluation [LO1] Dog Up! Franks is looking at a new sausage systemwith an installed cost of $460,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $55,000. The sausage system will save the firm $155,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $29,000. If the tax rate is 21 percent and the discount rate is 10 percent, what is the NPV of this project?
- Question 25 Jefferson International is trying to choose between the flowing two mutually exclusive design projects: Year Cash Flow (A) Cash Flow (B) 0 -$79,000 -$12,500 1 18,500 5,800 2 39,600 21,800 3 48,700 25,600 The required rate of return is 9 percent. Project A has a profitability index of 1.3 and project B has a profitability index of 1.24. Which project should the firm accept and why? Choose the answer with the "best" reasoning. Group of answer choices Project A because it has a higher profitability index Project B because it has a higher profitability index Project A because it has a higher NPV Project B because it has a higher NPV Project B because it has a higher profitability index and NPVQuestion 24 The Flour Baker is considering a project with the following cash flows. Should this project be accepted based on its internal rate of return if the required return is 5 percent? Year Cash Flows 0 -$200,000 1 40,000 2 50,000 3 60,000 4 70,000 Group of answer choices Yes, because the project’s IRR is higher than the required rate Yes, because the project’s IRR is lower than the required rate No, because the project’s IRR is higher than the required rate No, because the project’s IRR is lower than the required rate You are indifferent11. Problem 11.20 (NPV) eBook A project has annual cash flows of $7,500 for the next 10 years and then $5,500 each year for the following 10 years. The IRR of this 20-year project is 11.33%. If the firm's WACC is 11%, what is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent. BO $