Your firm is considering investing in a project that will require an initial outlay of $10,000. You expect the project to have an operating life of four years. You expect it to generate the following cash flows: (1) $3,000in the first year, (2) $4,000 in the second year, (3) $2,500 in the third year, and (4) $2,000 in the final year.Assuming that your firm requires 8% returns on such investments, what is the net present value of the project?O $59.29O $139.05-$338.23-$313.17

Net present value is determined by deducting the initial investment from the current value of cash…

Answered: Assuming that your firm requires 8%…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 2PA: Jasmine Manufacturing is considering a project that will require an initial investment of $52,000...

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Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?
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Your firm is considering investing in a project that will require an initial outlay of $10,000. You expect the project to have an operating life of four years. You expect it to generate the following cash flows: (1) $3,000 in the first year, (2) $4,000 in the second year, (3) $2,500 in the third year, and (4) $2,000 in the final year. What is the Payback period for the project? 2.75 years 4.00 years 4.15 years O 3.25 years
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Your firm is considering investing in a project that will require an initial outlay of $10,000. You expect the project to have an operating life of four years. You expect it to generate the following cash flows: (1) $3,000 in the first year, (2) $4,000 in the second year, (3) $2,500 in the third year, and (4) $2,000 in the final year. What is the project's internal rate of return? 8.74% 6.35% O 15.00% 3.56%
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Assuming that your firm requires 8% returns on such investments, what is the net present value of the project? $59.29 O $139.05 -$338.23 O $313.17