A project has cash flows of -$148,000, $43,000, $87,000, and $44,000 for Years 0 to 3, respectively. The required rate of return is 11 percent. Based on the internal rate of return of the project. percent for this project, you should

A project has cash flows of -$148,000, $43,000, $87,000, and $44,000 for Years 0 to 3, respectively. The required rate of return is 11 percent. Based on the internal rate of return of the project. percent for this project, you should

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

See similar textbooks

Related questions

Q: Please provide Answer with calculation

A: Here's a detailed calculation for better understanding. Discount RateThe discount rate is 13% or…

Q: The project will need an initial investment of $2,100,000 and will generate $1,200,000 cash flows…

A: Capital budgeting provides various modern methods to determine the rate of return of the project.…

Q: A project with an investment of $10,000 has net cash flows of $9, 000, $3,000, and $1,000 for each…

A: Average rate of return =Average net profits/average investment×100Average net profits =Total net…

Q: A project consists of a cost (negative cash flow) of $1,000 in Year 0 and a benefit (positive cash…

A: Annuity is a uniform regular and constant payment received at fixed intervals and periodically.…

Q: A project requires an increase in inventories, accounts payable, and accounts receivable of…

A: Increase in inventory$105,000Increase in accounts payable$70,000Increase in accounts…

Q: You invest $12,650 in a project today. You expect to receive cash flows $3,200, $5,160, $4,288,…

A: Discounted payback period is calculated as number of years required for a project to recover the…

Q: An investment project has an annual cash inflows of $4,200, $5,300, $6,100, and $7,400, and a…

A: Discount rate = 14% Cash Flows: Year Cash Flow 0 -15000.00 1 4200.00 2 5300.00 3 6100.00…

Q: Olive Company is considering a project that is estimated to cost $275,500 and provide annual net…

A: IRR is the required rate of return for the project to have zero Net Present value.IRR can be…

Q: A project has the following cash flows; cost =10,000, years 1-5 incoming cash flows are $5,000 each,…

A: Present values of cashflows = cashflow for each year/(1+ WACC)^time For year 1: PV = 5000/(1+0.1)^1…

Q: Consider the following four-year project. The initial outlay or cost is $180,000. The respective…

A: Working note:

Q: We have two mutually exclusive projects A and B. Both require initial costs of $10,000 and last for…

A: NPV means Net present value.It is a capital budgeting technique used for making investment…

Q: Carland, Inc., has a project available with the following cash flows. If the required return for the…

A: Year Cash flows 0 -268000 1 78300 2 101400 3 122800 4 74900 5 -13000

Q: A project has cash flows of -$108,000, $52,800, $53,200, and $83,100 for Years 0 to 3, respectively.…

A: Payback period is an important capital budgeting metric. Payback period is the time period taken to…

Q: Project S has a cost of $65,000, and its expected net cash inflows are $15,000 per year for 8 years.…

A: Certainly! Let's delve deeper into each concept:a) **Payback Period**:The payback period is a simple…

Q: Consider the following sets of investment projects: Compute the equivalent annual worth of each…

A: Equivalent annual worth is one of the capital budgeting techniques which is used to determine the…

Q: Find the net present value (NPV) and proﬁtability index (PI) of a project that costs $1,500 and…

A: The net present value for the project is calculated below:

Q: A young man saved his money every quarter for 5 years into his bank account. He deposits P2,000 per…

A: Here,

Q: Determine the average rate of return for a project that is estimated to yield total income of…

A: Total income over 4 years $250,000 Average annual net income ($250,000 / 4 years) $62,500

Q: Calculate the Net Present Value (NPV) of a project with an initial investment of $500,000 which…

A: Net Present Value(NPV) refers to one of the capital budgeting techniques. It is defined as the…

Q: A project requires an initial outlay at t = 0 of $4,000, and its cash flows are the same in Years 1…

A: Weighted Average cost of capital (WACC): The WACC is the overall cost of capital from all the…

Q: Consider the following two mutually exclusive projects (W and Z). -The table- Whichever…

A: Payback period is time period in which original investment amount can be recovered. A lower payback…

Q: Consider the following sets of investment projects: Compute the equivalent annual worth of each…

A: Given information: The below table shows the investment and revenue generated of different projects.…

Q: A five-year project has a projected net cash flow of $26,000 in year 1, $24,000 in year 2, $38,000…

A: Here, Year Cash flows0 $ -9,00,000.001 $ 26,000.002 $ 24,000.003 $ 38,000.004 $…

Q: A project is projected to cost $2,000,000 to undertake. It will generate positive cash inflows as…

A: The objective of the question is to calculate the Profitability Index (PI) of a project. The…

Q: A project has an initial cost of $56,000 and is expected to generate a single cash inflow of $77,000…

A: Excel Spreadsheet:

Q: Project A has a required return of 9.2 percent and cash flows of -$87,000, $32,600, $35,900, and…

A: Project A rate of return = r = 9.2% Initial investment = i = $87,000 Cash flow year 1 = cf1 =…

Q: A project requires a $100,000 investment and is expected to generate the following cash flows in the…

A: Step 1: Given Value for Calculation Initial Investment = i = $100,000Cash Flow for Year 1 = cf1 =…

Q: A new project will have an intial cost of $40,000. Cash flows from the project are expected to be…

A: Profitability Index: It represents the attractiveness measure of the project or an investment. It…

Q: Compute the IRR, NPV, PI, and payback period for the following two projects. Assume the required…

A: Given, Cashflows of Project A Cashflows of project B

Q: A project that provides annual cash flows of $24,000 for 9 years costs $110,000 today. Under the IRR…

A: Required return = 8%Initial cash flow (Year 0) = - $110,000Cash inflow (Year 1 - 9) = $24,000IRR =…

Q: Project A requires an initial investment of $20,500, a cash inflow of $15,500 in the first year, and…

A: The payback period is a simple measure that indicates how long it takes to recoup the original…

Q: (IRR calculation) Determine the internal rate of return on the following project: An initial outlay…

A: The internal rate of return shows the return on an investment made by an investor. It is helpful in…

Q: A project with an initial cost of $51,200 is expected to generate annual cash flows of $16,030 for…

A: IRR is also known as Net Present alue. It is a capital budgeting techniques which helps in decision…

Q: Project A has an initial cost of $55,000 expected net cash inflows of $35,000 per year for 3 years,…

A: The payback period refers to the amount of time it takes to recover the cost of an investment.…

Q: A project is projected to cost $2,000,000 to undertake. It will generate positive cash inflows as…

A: The objective of the question is to calculate the Profitability Index (PI) of a project. The…

Q: A project has an initial cost of $50 000, net annual cash inflows of $20 000, and a $2 000 salvage…

A: Rate of return is the return on the profit on investment, It can change the value of investment,…

Q: (Paybackperiod, NPV, PI, and IRR calculations) You are considering a project with an initial…

A: Step 1: Step 2: Step 3: Step 4:

Q: An investment project provides cash inflows of $ 608 per year for 5 years. What is the NPV of the…

A: Solution:- Net Present Value (NPV) means the net present value of cash inflows of project after…

Question

A project has cash flows of -$148,000, $43,000, $87,000, and $44,000 for Years 0 to 3, respectively. The required rate of return is 11 percent. Based on the internal rate of return of
the project.
percent for this project, you should

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!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

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

Suppose that a project requires an initial investment of 20 000 USD at the begynning of year 1. The project is expected to return 25 000 USD at the end of year 1. The required rate of return for the project is 20%. Calcualte the Net Present Value of the project as well as the Internal Rate of Return.
A project has cash flows of –$148,000, $43,000, $87,000, and $51,500 for Years 0 to 3, respectively. The required rate of return is 11 percent. Based on the internal rate of return of Blank 1 percent for this project, you should Blank 2 the project. Enter your answer in the first blank as a percent rounded to 2 decimal places, e.g., 32.16. Also enter either "accept" or "reject" in the second blank.
A two-year project has an initial investment of $38,643,310 and involves both a cash inflow and outflow. The cash inflow of $62,423,810 occurs at the end of year 1, while the cash outflow of $11,890,200 occurs at the end of year 2. The required rate of return is 13.5%. What is the NPV of the project? Options $7,122,513 $7,300,576 $7,478,639 $7,656,702 $7,834,764
Vijay
A project requires an increase in inventories, accounts payable, and accounts receivable of $130,000, $95,000, and $65,000, respectively. If opportunity cost of capital is 4% and the project has a life of 14 years, and the working capital investments will be recovered at the end of the life of the project, what is the effect on the NPV of the project? Enter your answer rounded to two decimal places. Enter your response below. Number
A project requires an initial investment of $70,000 and has a project profitability index of 0.932. The present value of the future cash inflows from this investment is:
A project has cash flows of -$35,000, $0, $10,000, and $42,000 for Years 0 to 3, respectively. The required rate of return is percent, you should the project. 15 percent. Based on the internal rate of return of O 24.76; accept O 13.96; accept O 14.92; reject O 15.21; accept A Click Submit to complete this assessment. Question 30 of 30 Save and Submit
A project requires an increase in inventories, accounts payable, and accounts receivable of $125,000, $70,000, and $65,000, respectively. If opportunity cost of capital is 1% and the project has a life of 19 years, and the working capital investments will be recovered at the end of the life of the project, what is the effect on the NPV of the project? Enter your answer rounded to two decimal places. Enter your response below. Number
A project has an initial cost of $61,450, expected net cash inflows of $11,000 per year for 10 years, and a cost of capital of 8%. What is the project's MIRR? Round your answer to two decimal places.
A project has the following cash flows. It costs $15,000. It briongs in $22,000 after one year, and costs an adittional $6,500 after two years. The Required rate of return is 11%. Calculate the MIRR using the combination approach.
Perform a financial analysis for a project. Assume that the projected costs and benefits for this project are spread over 6 years as follows. Estimated costs are $1,100,000 in Year 0, and $50,000 each year in Years 1, 2, 3, 4, 5 and 6. Estimated benefits are $0 in Year 0, and $450,000 each year in Years 1, 2, 3, 4, 5 and 6. Use a 15% discount rate. Suppose the required payback period and discounted payback period are both 3 years. (1) Calculate the payback period (based on the original cash flows without discounting), and evaluate the project based on the payback method. (2) Calculate the discounted payback period (based on discounted cash flows), and evaluate the project based on the discounted payback method. (3) Evaluate the project using the NPV method, and explain whether you would recommend investing in this project.
A project with an initial outlay of $400 has an economic life of 5 years. The project after-tax cash flows are $150 in Years 1 & 2, then after-tax cash flows of $100 in Years 3 through 5. Calculate the internal rate of return, net present value and profitability index using an interest rate of 12%.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

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

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

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

SEE MORE TEXTBOOKS