Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Related questions
Concept explainers
Question
A new project will have an intial cost of $100,000. Cash flows from the project are expected to be $-20,000, $40,000, $30,000, $30,000 and $40,000 over the next 5 years, respectively. Assuming a discount rate of 10%, what is the project's NPV?
Question 3 options:
|
|
$(16,049.26)
|
|
|
$(17,257.27)
|
|
|
$(15,531.54)
|
|
|
$(17,602.41)
|
|
|
$(16,566.98)
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Use the following table of free cash flows for an investment to answer questions 12-15: 2 5,000 3 3,000 Free Cash Flow -8,000 1,000 12. What is the payback period for this project? If the required payback period is 2 years, would you invest in this project based on the payback period? 13. If the discount rate is 10%, what is the discounted payback period for this project? If the required discounted payback period is 2 years, would you invest in this project based on the payback period? 14. What is the internal rate of return on this project? If the discount rate (or WACC) is 10%, would you invest in this project? 15. With a discount rate (or WACC) of 10%, what is the net present value (NPV) of this project and would you accept or reject the project?arrow_forwardA new project will have an intial cost of $10,000. Cash flows from the project are expected to be $3,000, $3,500, and $4,000 over the next 3 years, respectively. Assuming a discount rate of 8%, what is the project's discounted payback period? Question 4 options: 2.23 2.89 2.75 2.10 It does not pay back on a discounted basisarrow_forwardInternal Rate of Return. Lepton Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rates and the future cash flows of each project, what are the IRRs of the three projects for Lepton Industries? Cash Flow Year 1 Year 2 Year 3 Year 4 Year 5 Project Q $500,000 $500,000 $500,000 $500,000 $500,000 What is the IRR for Project Q? % (Round to two decimal places.) What is the IRR for Project R? % (Round to two decimal places.) What is the IRR for Project S? % (Round to two decimal places.) Project R $700,000 $700,000 $700,000 $700,000 $700,000 Project S $1,100,000 $900,000 $700,000 $500,000 $300,000 GTDarrow_forward
- With an initial cost of $100,000, a WACC of 15%, and subsequent cash flows for years 1, 2, 3 of $25,000, $50,000, $75,000, in how many years will break even occur? Use non-discounted cash flows for your calculation. Use the information above and calculate the discounted payback period what is the project’s NPV?arrow_forwardAn investment project has annual cash inflows of $6,000, $7,100, $7,900 for the next four years, respectively, and $9,200, and a discount rate of 16 percent. What is the discounted payback period for these cash flows if the initial cost is $9,500? (Do not round your intermediate calculations.) Multiple Choice 3.64 years O 1.82 years O 2.57 years O 0.82 years O 1.32 yearsarrow_forwardCompute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$1,400 $510 $600 $600 $380 $180 Payback years: _______.__arrow_forward
- An investment project costs $21,500 and has annual cash flows of $6,500 for 6 years. If the discount rate is 15 percent, what is the discounted payback period? Select one: a. 5.71 b. 3.91 c. 4.21 d. 4.91 e. 5.91arrow_forwardte.7arrow_forwardA new project will have an intial cost of $75,000. Cash flows from the project are expected to be $45,000, $25,000, and $20,000 over the next 3 years, respectively. Assuming a discount rate of 8%, what is the project's PI? Question 7 options: 0.98 1.10 1.05 0.95 1.01arrow_forward
- A project has the following cash flows: C * 0 = - 100000; C 1 = 50000 C * 2 = 150000 C 3 = 100000 . If the discount rate changes from 12 percent to 15 percent, what is the CHANGE in the NPV of the project ( approximately)? Multiple Choice 12,750 increase 12,750 decrease 14,240 increase 14,240 decreasearrow_forward2. You are considering two mutually exclusive projects with the following cash flows. The discount rate is 7.5 percent: YEAR PROJECT N PROJECT Y - P21,000,000 - P21,000,000 1 7,200,000 8,500,000 (a) Calculate the payback period of each project. ( (b) Compute the net present value of the two projects. (c) Which project should be accepted? Justify your answer. 2 4,900,000 5,200,000 9,100,000 4,900,000 4 6,100,000 8,700,000arrow_forwardYou are evaluating an investment project, which has a cost of $161,000 today and is expected to provide after-tax annual cash flows of $20,000 for seven years. In order to compute the MIRR, you are modifying the cash flows. Assuming the cost of capital is 9.1 percent, what is the terminal cash flow of the modified cash flows? Question 12 options: $173,074 $176,474 $178,474 $180,974 $182,874 $184,574arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education