An energy management system that can save $8,040 per year for four (4) years, expenses are $2,000 per year, can be installed at a cost of $20,000. At the end of four (4) it is expected to be sold for $1,250. Using the end of year convention, the rate of return on this planned investment is most nearly: 1.ROR=9.81% 2. ROR = 10% 3. ROR=9.5% 4.ROR = 6%

An energy management system that can save $8,040 per year for four (4) years, expenses are $2,000 per year, can be installed at a cost of $20,000. At the end of four (4) it is expected to be sold for $1,250. Using the end of year convention, the rate of return on this planned investment is most nearly: 1.ROR=9.81% 2. ROR = 10% 3. ROR=9.5% 4.ROR = 6%

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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Calculate the IRR and NPV for a $1,000,000 investment with a 5% return annually over a 5 year period for a total of $ 1,200,000. Use a WACC value of 14.54%.
2
Vijay
Novak Company is contemplating an investment costing $168,810. The investment will have a life of 8 years with no salvage value and will produce annual cash flows of $30,500. Click here to view PV tables. What is the approximate internal rate of return associated with this investment? (Use the above table.) (Round answer to O decimal places, e.g. 15%) Internal rate of return. %6
Replacing old equipment at an immediate cost of $40,000 and an additional outlay of $25,000 three years from now will result in savings of $15,000 per year for 5 years. The required rate of return is 7% compounded annually. Compute the net present value and determine if the investment should be accepted or rejected according to the net present value criterion. The net present value of the project is S. (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) The proposal should be rejected. accepted.
Replacing old equipment at an immediate cost of $50,000 and an additional outlay of $15,000 six years from now will result in savings of $11,000 per year for 7 years. The required rate of return is 5% compounded annually. Compute the net present value and determine if the investment should be accepted or rejected according to the net present value criterion. The net present value of the project is S (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) The proposal should be аcсepted. rejected.
Replacing old equipment at an immediate cost of $50,000 and an additional outlay of $30,000 six years from now will result in savings of $3,000 per quarter for 12 years. The required rate of return is 10% compounded annually. Determine the net present value and if the investment should be accepted or rejected.
An investment project involves an investment now of 100. In one year, a positive cash flow of 40 is expected, in two years, a positive cash flow of 50 is expected and, finally, in three years, a positive cash flow of 60 is expected. What is the internal rate of return on the project?
5. A new tablet computer from the R&D department will earn $20,000 in revenue in one year, which will then grow by 20% each subsequent year. Suppose an interest rate of 5% per year and a horizon of 20 years. What is the cutoff value for the initial investment that would make this project worthwhile? (i) Compute the answer using the formula (ii) Compute the answer using a spreadsheet (iii) If we change the interest rate, the cutoff value will change. Draw a plot of the cutoff value versus interest rate.
Consider a project that has an initial cost of $100 million. The project has a payback period of 2 years. The required rate of return is 10%. What is the best case NPV? A) $0 B) $100 million C) -$100 million D) $50 million E) unlimited
An investment of $80,000 is expected to generate a net annual income of $27,000 for 5 years. If the study period is 20 years, and assuming this alternative will be repeated over the study period, what is the present worth of this investment if MARR is 11%? O a. $5,354 O b. $21,418 O c. $135,010 O d. $42,639 O e. $19,789
Calculate Net Present Value of minitor that costs $ 35,000.00 Amortization period 5 years with savings of 8000 per year with a hurdle rate of 12%, 5%. Which investment is more attractive?

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