
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text: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.
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- A project has an initial cost of $40,000, expected net cash inflows of $12,000 per year for 12 years, and a cost of capital of 12%. What is the project's MIRR? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.arrow_forwardA project has an initial cost of $35,000, expected net cash inflows of $8,000 per year for 9 years, and a cost of capital of 13%. What is the project's PI? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.arrow_forwardA project has an initial cost of $60,000, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 12%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent.arrow_forward
- What is the equivalent annual cost for a project that requires a $50,000 investment at time-period zero, and a $10,000 annual expense during each of the next 4 years, if the opportunity cost of capital is 10%?arrow_forwardConsider an investment project in which you invest $3,500 today in order to receive $525 at the end of each of the next 10 years. If the cost of capital is 12% per year, what is the IRR and should the project be accepted? 7.23%, accept project 7.23%, reject project 5.28%, accept project 5.28%, reject project 8.14%, reject project 8.14%, accept project a. b. C. d. e. O f.arrow_forwardA 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. Numberarrow_forward
- A project has an initial cost of $50,000, expected net cash inflows of $11,000 per year for 10 years, and a cost of capital of 14%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent.arrow_forward1.Assuming you are facing with making a decision on a large capital investment proposal. the capital investment amount is $ Estimated the study period is years .The annual revenue at the end of each year is $ and the estimated annual year-end expense is $ starting in year Assuming a market value at the end year is $ and the benchmark rate is 10%, please answer the following questions: 1.Please design this investment project to fill the proper number in blank space to let the project is feasible in economics( 2.To give the cash flow chart of the project(arrow_forwardA project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years, and a cost of capital of 8%. What is the project's IRR? Round your answer to two decimal places.arrow_forward
- Assuming monetary benefits of a construction project at $50,000 per year, one-time costs (initial investment) of $15,000, recurring costs of $35,000 per year, a discount rate of 10 per cent, and a 4-year time horizon, calculate the net present value (NPV) of an information system's costs and benefits. Calculate the overall return on investment (ROI) of the project. During which year does break-even occur? Use the NPV template provided (modify to suit your answer) and clearly display the NPV, ROI, and year in which payback occurs. Write a paragraph explaining whether you would recommend investing in this project based on your financial analysis. Explain your answer referring to the NPV, ROI and payback for this project. Discount Rate (10%) Year 0 - 1.0000 Year 1 - .9091 Year 2 - .8264 Year 3 - .7513 Year 4 - .6830arrow_forwardDetermine the payback period, in years, of a project that is expected to generate $80,000 per year in cash flow. The project cost (initial investment) is $1,100,000. Then, name one other method (excluding payback period) used by financial managers, to assess the viability of a multi-year project. State specifically how the method that you named is different from the payback period method.arrow_forwardWhat is the payback period for project E? Data Table - X years (Round to one decimal place.) (Click on the following icon in order to copy its contents into a spreadsheet) Cash Flow Cost Cash flow year 1 Cash flow year 2 Cash flow year 3 Cash flow year 4 Cash flow year 5 Cash flow year 6 $46,000 $100,000 $20,000 $9,200 $9,200 $10,000 $9,200 $40,000 $9,200 $30,000 $9,200 $0 $9,200 $0 Print Donearrow_forward
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