Kwon Jewelers is evaluating a 1-year project that would involve an initial investment in equipment of $32,000 and an expected cash flow of $36,000 in 1 year. The project has a cost of capital of 8.36 percent and an internal rate of return of 12.50 percent. If Kwon Jewelers were to use $32,000 in cash from its bank account to purchase the equipment, the net present value of the project would be $1,222.59. However, Kwon Jewelers has no cash in its bank account, so using money from its account is not possible. Therefore, the firm would need to borrow money to raise the $32,000. If Kwon Jewelers were to borrow money to raise the $32,000, the interest rate on the loan would be 13.47 percent. Kwon Jewelers would receive $32,000 at the start of the project and would pay $36,310 one year later. What is the NPV of the project if Kwon Jewelers borrows $32,000 to pay for the project? $1,222.59 (plus or minus 3 dollars) $0.00 (plus or minus 3 dollars) $-273.55 (plus or minus 3 dollars) $1,509.04 (plus or minus 3 dollars) none of the answers are within 3 dollars of the correct answer

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…

Strange Manufacturing Company is purchasing a production facility at a cost of $12 million. The company expects the project to generate annual cash flows of $6.4 million over the next 5 years. Its cost of capital is 6.7 per cent.  What is the net present value of this project? Round your answer to 2 decimal places. E.g. if the final value is $12345.8342, please type 12345.83 in the answer box (do not type the dollar sign).

A project will produce an operating cash flow of $78,900 a year for five years. The initial cash outlay for equipment will be $110,530. The net after-tax salvage value of $33,147 will be received at the end of the project. The project requires $17,938 of net working capital that will be fully recovered at the end of the project. What is the net present value of the project if the required rate of return is 12 percent?