Assuming infinite replication and a cost of capital of 11 percent, determine the net present value of this project using the Equivalent Annual Annuity approach. Year Cash Flow 0 ($5,000.00) 1 $2,000.00 2 $1,600.00 3 $1,400.00 4 $1,200.00 5 $1,000.00 O $1,450 $1,066 $1,250 $896 O $740
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- Project X costs $10,000 and will generate annual net cash inflows of $4,800 for five years. What is the NPV using 8% as the discount rate?How much would you invest today in order to receive $30,000 in each of the following (for further Instructions on present value In Excel, see Appendix C): A. 10 years at 9% B. 8 years at 12% C. 14 years at 15% D. 19 years at 18%Assume that Project A has the cash flows listed below and a relevant cost of capital of 13 percent. Based on this data, determine the net present value (NPV) of this project using the equivalent annual annuity (EAA) approach and assuming infinite replication. Year 0 1 2 3 4 5 $2.905.70 O $4.967.16 $2.063.33 $3.865.27 $6,244.42 Project A Cash Flow - $8.000.00 $ $ $ 0.00 0.00 0.00 0.00 $20,000.00
- Boomerang Bungee Corp. is considering the following project. Determine the equal annual annuity for the project if the cost of capital is 14%. Initial Investment: $75,000 Year Cash Inflows 1 $30,000 2 $35,000 3 $40,000 a. $2,259.62 b. $4,355.25 c. $7,768.67 d. $5,527.89Assuming infinite replication and a cost of capital of 10.5 percent, determine the nel present value of this project using the Equivalent Annual Annuity approach. Year Cash Flow 0 ($5,000.00) $2,000.00 2 $1.600.00 $1,400.00 $1,200.00 $1,000.00 3 Ⓒ$1,250 $1,450 $896 O $1.066Book Show Me How E Print Item Internal Rate of Return A project is estimated to cost $507,840 and provide annual net cash flows of $69,000 for 10 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.353 2.991 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 6.210 5.335 4.968 4.487 3.837 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 of return for this proj using the Present Value of an Annuity of $1 at Compound Interest table shown above. Determine the internal Previous Check My Work 3 more Check My Work uses remaining. Email Instructor Save and Exit Submit Assignmen All work saved. DD F11 F10 80 888 F9 F8 F6 F4 & # $ %3D 4 5 6 7 8 9 3 P E R Y U G H JK
- Stellan Manufacturing is considering the following two investment proposals: Proposal X Proposal Y $510,000 4 years Investment Useful life Estimated annual net cash inflows received at the end of each year Residual value Depreciation method Annual discount rate 1 2455 N. Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 8% 9% 10% 2 3 6 0.926 1.783 2.577 3.312 3.993 4.623 OA. $255,000 OB. $295,800 OC. $317,520 OD. $272,085 0.917 1.759 2.531 3.240 3.809 4.486 $732,000 5 years 0.909 1.736 2.487 3.170 3.791 4.355 $164,000 $68,000 Straight-line Straight-line 10% $98,000 $0 ... 9%I Net Present Value A project has estimated annual net cash flows of $6,250 for two years and is estimated to cost $30,000. Assume a minimum acceptable rate of return of 12%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 12% 15% 20% 1 0.943 2 3 4 5 6 7 8 9 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 10 10% 7.360 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 0.893 1.690 2.402 3.037 3.605 4.111 0.870 1.626 2.283 2.855 3.353 3.785 4.160 4.487 4.772 0.833 5.019 1.528 2.106 2.589 4.564 4.968 5.328 5.650 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places) 2.991 3.326 3.605 3.837 4.031 4.192Based on the following table, what is the approximate Internal Rate of Return (IRR) for a project that costs $189,000 and provides annual cash inflows of $70,000 for 3 years? (See your Chapter 25 notes, page 8) Rate of Present Value of an AnnuityReturn of $1 Received for Three Years 4% 2.8 6% 2.7 8% 2.6 10% 2.5 12% 2.4 14% 2.3 16% 2.2 20% 2.1 16 percent 10 percent 8 percent 14 percent 4 percent 20 percent 12 percent 6 percent
- Consider the following two mutually exclusive projects: Net Cash Flow End of year Project A Project B - $1,100 $276 $552 -$1,100 $840 2 $630 $420 $828 4. $210 $1,104 Click the icon to view the interest factors for discrete compounding when /= 20% per year. (a) At an interest rate of 20%, which project would you recommend choosing? The present worth of Project A is $ 381.78. (Round to the nearest cent.) The present worth of Project B is $ 524.92 (Round to the nearest cent.) Which project should be selected? Choose the correct answer below. Project A Project B (b) Compute the area of negative project balance, discounted payback period, and area of positive project balance for each project. Fill in the table below. (Round to the nearest dollar.) Project Balances B 1100 1100 -480 -1,044Net present value A project has estimated annual net cash flows of $5,000 for 1 years and is estimated to cost $32,500. Assume a minimum acceptabile rate of return of 10%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.909 0.893 0.870 1.736 1.690 1.626 2.487 2.402 2.283 3.170 3.037 2.855 3.791 3.605 3.353 2.991 4.355 4.111 3.785 3.326 4.868 4.564 4.160 3.605 5.335 4.968 4.487 3.837 9 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places) 1 2 3 4 5 6 7 8 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 0.833 1.528 2.106 2.589An investment project provides cash inflows of $740 per year for 9 years. What is the project payback period if the initial cost is $1,480? A. 2.00 years B. 2.02 years C. 1.90 years D. 1.94 years E. 2.04 years What is the project payback period if the initial cost is $4,958? A. 6.70 years B. 6.77 years C. 6.37 years D. 6.83 years E. 6.50 years What is the project payback period if the initial cost is $7,400? A. 3.01 years B. Never C. 4.95 years D. 5.25 years E. 1.35 years
