An investment project requires an initial payment of $500,000, and then will earn a constant return of $45,000 every year forever. Is this a profitable investment project? Oyes, it is profitable O you can't tell with this information Ono, it is not profitable

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Suppose you are considering building a factory that produces turbo jets. Price of a turbo jet right now is $200. Next year the price could go up to $220 or go down to $180 or stay at $200 with equal probabilities. The price then remains fixed for a long time. (This assumption makes this cash flow risky). This will be your revenue. Cost of factory is $300 and it can be built right away since you have infrastructure in place. WACC is 30%. Cost of debt is 10%. You have the option to wait one year and see whether the price goes up or down and then invest only if price is above $180? What is the NPV? 414.22 167.52 312.82 566.67

1) Rainbow Corp. is considering an investment whereby it will invest $100 in a perpetuity that will pay the firm $30 annually forever, starting one year from now. If the firm has a payaback period of 3 years, will it do the project? a) Yes b) No   2) If Rainbow has a cost of capital of 10%, will it invest in the project when doing an NPV analysis? a) Yes b) No

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A new investment offers TimeTek future cash flows of $Q in six years and SP in 12 years. Assuming a negative interest rate of throughout the entire time, TimeTek will pay up to $50,000 today to receive these future cash flows. If the interest rate becomes zero (r=0%), what will TimeTek be willing to pay for these same cash flows $Q and SP? O Less than $50,000 O $50,000 O Not enough information to determine More than 50,000

Most you can pay negative NPV? 22. You are getting ready to start a new project that will incur some cleanup and shutdown costs when it is completed. The project costs $5.4 million up front and is expected to generate $1.1 million per year for 10 years and then have some shutdown costs in year 11. Use the MIRR approach to find the maximum shutdown costs you could incur and still meet your cost of capital of 15% on this project. Cald in South Africa

You are a consultant to a large manufacturing corporation that is considering a project with the following net after-tax cash flows (in millions of dollars): Years from Now 0 1-10 After-Tax Cash Flow -45 12 The project's beta is 1.4. Required: a. Assuming that ry=6% and E(M) = 14%, what is the net present value of the project? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. b. What is the highest possible beta estimate for the project before its NPV becomes negative? Note: Round your answer to 2 decimal places. a. Net present value b. Highest beta