Denver Mart is considering a project with a life of five years and an initial cost of $136,000. The discount rate is 11 percent. The firm expects to sell 2,200 units a year with a cash flow per unit of $26. The firm will have the option to abandon this project after three years at which time it expects it could sell the project for $48,000. The firm is interested in knowing how the project will perform if the sales forecast for Years 4 and 5 of the project are revised such that there is a probability of 50 percent that the sales will be 1,000 units and a probability of 50 percent they will be 2,500 units a year. What is the net present value of this project given your sales forecasts? Multiple Choice A $62,025 B.-$43,719 C. $6,877 D. $55,002 E. $23,617

You are considering a proposal to produce and market a new sluffing machine. The most likely outcomes for the project are as follows: Expected sales: 115,000 units per year Unit price: $220 Variable cost: $132 Fixed cost: $4,890,000 The project will last for 10 years and requires an initial investment of $16.70 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 30%, and the required rate of return is 12%. However, you recognize that some of these estimates are subject to error. In one scenario a sharp rise in the dollar could cause sales to fall 30% below expectations for the life of the project and, if that happens, the unit price would probably be only $210. The good news is that fixed costs could be as low as $3,260,000, and variable costs would decline in proportion to sales. a. What is project NPV if all variables are as expected? Note: Do not round intermediate calculations. Enter your answer in thousands not in…

big​ Steve's, makers of swizzle​ sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $105,000 and will generate net cash inflows of ​$20,000 per year for 9 years.   What is the​ project's NPV using a discount rate of 7 percent​? Should the project be​ accepted? Why or why​ not? b. What is the​ project's NPV using a discount rate of 13 percent? Should the project be​ accepted? Why or why​ not? c. What is this​ project's internal rate of​ return? Should the project be​ accepted? Why or why​ not?

Galbraith Co. is considering a four-year project that will require an initial investment of $7,000. The base-case cash flows for this project are projected to be $14,000 per year. The best-case cash flows are projected to be $26,000 per year, and the worst-case cash flows are projected to be –$4,500 per year. The company’s analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a 25% probability of the project generating the best-case cash flows and a 25% probability of the project generating the worst-case cash flows. What would be the expected net present value (NPV) of this project if the project’s cost of capital is 12%? $30,587   $29,058   $35,175   $36,704     Galbraith now wants to take into account its ability to abandon the project at the end of year 2 if the project ends up generating the worst-case scenario cash flows. If it decides to abandon the project…