Answered: calculate the net present value of the…

calculate the net present value of the following: Project A requires an initial investment of $1,000 and is expected to generate cash flows of $400 per year for 3 years

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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Question

calculate the net present value of the following: Project A requires an initial investment of $1,000 and is expected to generate cash flows of $400 per year for 3 years

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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Similar questions

A project is expected to create operating cash flows of $25,300 a year for four years. The fixed assets required for the project cost $60,000 and will be worthless at the end of the project. An additional $3,000 of net working capital will be required when the project starts and will be fully recovered at the end of the project. What is the project's net present value if the required rate of return is 12 percent? O $14,028.18 O $15.751.49 O $16,954.17 O $17,396.31
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An investment project provides cash inflows of $ 2,403 per year for 10 years. What is the project payback period if the initial cost is $ 9,090 ?
A project has estimated annual net cash flows of $11,250 for four years and is estimated to cost $37,500. Assume a minimum acceptable rate of return of 12%. Use Present Value of an Annuity of $1 at Compound Interest table below.
A 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.
A project will produce an operating cash flow of $164,000 a year for three years. The initial cash outlay for equipment will be $305,000. The net aftertax salvage value of $12,500 will be received at the end of the project. The project requires $41,000 of net working capital up front that will be fully recovered when the project ends. What is the net present value of the project if the required rate of return is 11 percent?$93,887.95 correct $90,124.63 incorrect$86,361.31 incorrect$82,597.99 incorrect$78,834,67 incorrect $93,887.95 $90,124.63 $86,361.31 $82,597.99 $78,834.67
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