Company ABC decided to invest in a project that will earn an income of $25,000 in the first year of operation. ABC expects that the income will decline at a rate of 5% per year thereafter because of increased competition. If the interest rate is 2%, calculate the value of the project.

Grayson Company is considering a purchase of equipment that costs $62,000 and is expected to offer annual cash inflows of $17,000. Grayson’s minimum required rate of return is 10%. How many years must the cash flows last for the investment to be acceptable ?

Consider a project with an initial investment (today, t = 0) of $225,000. This project will generate cash flows of $68,750 per year for the next 6 years. The company will pay $50,000 to another for clean-up and disposal in Year 6. What is the Profitability Index (PI) of the project if shareholders demand 8.25% return? Answer in whole numbers, rounded to three decimal places.

Soul Corp. management is expecting a project to generate an after-tax income of $77,270 in each of the next three years. The average book value of the project’s equipment over that period will be $200,120. If the firm’s investment decision on any project is based on an ARR of 37.5 percent. (Round answer to 1 decimal place, e.g. 5.2%.)What is the project’s accounting rate of return?______% Should the firm accept this project?_________

Growth Enterprises believes its latest project, which will cost $80,000 to install, will generate a perpetual growing stream of cash flows. Cash flow at the end of the first year will be $6,000, and cash flows in future years are expected to grow indefinitely at an annual rate of 5%.. a. If the discount rate for this project is 10%, what is the project NPV? Note: Do not round intermediate calculations. Answer is complete and correct. NPV $ 40,000 b. What is the project IRR? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. IRR Answer is complete but not entirely correct. 0.00%

A company is considering an investment that will require a cost outlay of $5,000 per year for the first five years and an extra $2000 at the beginning of Year 8. At the end of the project, the salvage value will be $15,000. The project will yield returns of $8500 at the end of each year from Year 4 to Year 10. There are no returns after Year 10. Providing a 21% rate of return, what is the NPV? If your answer is negative, be sure to place a (-) sign before the number.

NPV and IRR   Benson Designs has prepared the following estimates for a​ long-term project it is considering. The initial investment is ​$17,950​, and the project will yield cash inflows of ​$3,000 per year for 9 years. The firm has a cost of capital of 8​%. a.  Determine the net present value​ (NPV) for the project. b.  Determine the internal rate of return​ (IRR) for the project. c.  Would you recommend that the firm accept or reject the​ project?

FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $213,000 per year. Once in production, the bike is expected to make $319,500 per year for 10 years. Assume the cost of capital is 10%. a. Calculate the NPV of this investment opportunity, assuming all cash flows occur at the end of each year. Should the company make the investment? b. By how much must the cost of capital estimate deviate to change the decision? (Hint: Use Excel to calculate the IRR.) c. What is the NPV of the investment if the cost of capital is 14%? Note: Assume that all cash flows occur at the end of the appropriate year and that the inflows do not start until year 7. a. Calculate the NPV of this investment opportunity, assuming all cash flows occur at the end of each year. Should the company make the investment? The present value of the costs is $ (Round to the nearest dollar.) The present value of the benefits is $. (Round to the nearest…

You are evaluating a project that will cost $543,000​, but is expected to produce cash flows of $127,000 per year for 10 ​years, with the first cash flow in one year. Your cost of capital is 10.9% and your​ company's preferred payback period is three years or less. a. What is the payback period of this​ project? b. Should you take the project if you want to increase the value of the​ company?

You are considering opening a new plant. The plant will cost $102.5 million upfront and will take one year to build. After that, it is expected to produce profits of $28.4 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 6.7%. Should you make the investment? Calculate the IRR. Does the IRR rule agree with the NPV rule? Here is the cash flow timeline for this problem: Years 0 Cash Flow ($ million) - 102.5 1 2 28.4 3 28.4 4 28.4 Forever 28.4