Great Adventures, Inc. has an investment project, which has a cost of $43,000 today and is expected to provide after-tax annual cash flows of $19,000 for six years. If the firm's cost of capital is 11.2 percent, what is the MIRR of the project? Question 13 options: 23.3% 25% 26.4% 27.5% 29.1% 29.9%
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- Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?X construction is considering two projects to develop. The estimated net cash flow from each project is as follows:YearProject X ($)Project Y ($)1110,00075,000265,000150,0003100,00060,0004115,00055,000535,00060,000Total425,000400,000Each project requires an investment of $ 200,000. The cost of capital is 10%.Require toa) Calculate Net Present Value, Payback period, ARR and Profitability Index.b) Which Project is to be recommended to develop based on NPV, Profitability Index, Payback period and ARR? Suggest9.4 Better Health Inc. is evaluating two capital investments, each of which requires an up-front (time 0) expenditure of $1.5 million. The projects are expected to produce the following net cash inflows: Year Project A ($) Project B ($) 1 500,000 2,000,000 2 1,000,000 1,000,000 3 2,000,000 600,000 What is each project’s IRR? What is each project’s NPV if the opportunity cost of capital is 10 percent? 5 percent? 15 percent?
- QUESTIONS THREEYou are a financial Analyst for Bandari Limited. The director of capital budgeting has asked you to analyze two proposed capital investments , project a X and Y. Each project has a cost of $ 10,000 and the cost of capital for each each project is 12%. The projects expected net cash flow are as followsYEAR PROJECT X PRJECT Y0 (10,000) (10,000)1 6,500 3,5002 3,000 3,5003 3,000 3,5004 1,000 3,500For each Project, estimate;(a) Regular pay back period(b) NPV(c) MIRR(d) IRR(e) Cross over rate(f) NPV for each project using the Cross over rate estimated in part (e)(g) Assumed re-investment rate based on (i) IRR assumption(ii) NPV assumptionPorter Company is analyzing two potential investments Initial investment Net cash flow: Year 1 Year 2 Year 3 Year 4 Project X Project Y $ 75,900 $ 64,000 26,000 26,000 26,000 4,400 28,000 28,000 20,000 If the company is using the payback period method, and it requires a payback of three years or less, which project(s) should be selected? 01) ABC Inc. is looking at investing in a 3-year project that will create cash inflows of $7,000 in the first year, $8,000 in the second year, and $9,000 in the third year. The cost of this project is $18,000, and the required return is 12%. Calculate ABC's IRR for this project. Multiple Choice 13.75% 12.36% 16.98% 15.17% 16.15 2) Setting the project bid price requires the following variables: capital spending, salvage value, additions to NWC, after-tax operating income and tax shield on CCA. True/False
- Question Green Landscaping, Inc. is using net present value (NPV) when evaluating projects. Green Landscaping's cost of capital is 8.04 percent. What is the NPV of a project if the initial costs are $1,915,222 and the project life is estimated as 10 years? The project will produce the same after-tax cash inflows of $698,670 per year at the end of the year. Round the answer to two decimal places. check_circle Expert Answer thumb_up thumb_down Step 1 Given information is: Initial investment = $19,15,222 Project life = 10 years Annual cash inflow = $698,670 Cost of capital = 8.04% Step 2 Net present value of project = Present value of cash inflows - Initial investment I don't understand how this answer is derived (in bold). Present value of cash inflows = (Annual cash inflows * Present value factor @8.04% for 10 years) = 698670 * 6.6979 = $46,79,621.79 Net present value of project = 46,79,621.79 - 1915222 = $27,64,399.79What is the internal rate of return for a project that has a net investment of $76,000 and net cash flows of $20,507 per year for 7 years? a. 18.2% b. 19% c. 16% d. 17%aj.7 Steve's Stoves Company, which desires a minimum rate of return on its investment projects of 15%, has two proposals under consideration. Their costs and expected cash flows are: A B Initial Investment $96,000 $132,000 Expected after-tax cash flows: Year 1 $40,000 $52,000 Year 2 $32,000 $56,000 Year 3 $48,000 $40,000 Year 4 $24,000 $32,000 In addition, proposal B has an expected cash salvage value at the end of four years of $8,000. The present value of $1 due in 1, 2, 3, and 4 years at 15% is .86957, .75614, .65752, and .57175, respectively.Using the profitability index method, determine which project, if either, should be accepted by the company.
- Consider the following investment project: n An I0 -$8,500 9%1 $4,400 12%2 $4,400 10%3 $1,500 13%4 $3,500 12%5 $4,300 10%Suppose, as shown in the preceding table, that the company's reinvestment opportunities (that is, its MARR) change over the life of the project. For example, the company can invest funds available now at 9% for the first year, 12% for the second year, and so forth. Calculate the net present worth of this investment, and determine its acceptability.Porter Company is analyzing two potential Investments. Project X $ 75,900 Initial investment Net cash flow: Year 1 Year 2 Year 3 Year 4 Multiple Choice O If the company is using the payback period method, and it requires a payback of three years or ess, which project(s) should be selected? Project Y. 26,000 26,000 26,000 0 Project X. Project Y $ 64,000 Both X and Y are acceptable projects. 4,400 28,000 28,000 20,000 Neither X nor Y is an acceptable project. Project Y because it has a lower Initial Investment.Intro A project requires an initial investment of $77.4 million to buy new equipment, and will provide after-tax cash flows of $27 million per year for 4 years. Part 1 What is the project's internal rate of return? 3+ decimals Submit