Malema Pty Ltd, a furniture manufacturer, has been offered an opportunity to accept a project that has the following mixedstream of cash flows over the next 5 years:2Year13Cash flow700080009000If the company must earn at least 12% on this project. What is the present value of this project?410000511000

Interest Rate = r = 12%Cash Flow for Year 1 = cf1 = 7000Cash Flow for Year 2 = cf2 = 8000Cash Flow…

Malema Pty Ltd, a furniture manufacturer, has been offered an opportunity to accept a project that has the following mixed stream of cash flows over the next 5 years: Year 1 2 3 Cash flow 7000 8000 9000 If the company must earn at least 12% on this project. What is the present value of this project? 4 10000 5 11000

Malema Pty Ltd, a furniture manufacturer, has been offered an opportunity to accept a project that has the following mixed stream of cash flows over the next 5 years: Year 1 2 3 Cash flow 7000 8000 9000 If the company must earn at least 12% on this project. What is the present value of this project? 4 10000 5 11000

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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The 5-year project your team is starting right now requires the following levels of net working capital for the next 5 years: Timeline T0 T1 T2 T3 T4 T5 net working capital $59000 $62000 $77000 $86000 $86000 $0 What's the cash flow from changes in net working capital at the end of the project (T5)?
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BECL Ltd is considering a project, which will involve the following cash inflows and (out)flows: $000 Initial Outlay (400) After 1 year 40 After 2 years 300 After 3 years 300 What will be the NPV (net present value) of this project if a discount rate of 15% is used? a. -$60.8k b. $460.8k c. $240k d. $60.8k
A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below: Years 0 1 2 3 4 S -1,100 900 350 100 10 L -1,100 0 300 550 850 The company's cost of capital is 12 percent, and it can get an unlimited amount of capital at that cost. The cutoff payback period is two years. Which project should the company choose based on payback period and discounted payback period? Question 5 options: Based on payback, choose project L; based on discounted payback, also choose L. Based on payback, choose project L; based on discounted payback, choose neither. Based on payback, choose project S; based on discounted payback, also choose S. Based on payback, choose project S; based on discounted payback, choose neither.
A project has the following cash in and out flows in its first year: Income generated: R100 000 Cost of sales R30 000 Depreciation R10 000 What would the tax payable for the first year of the project be if the tax rate is 27%?
ABC Company Limited looking to invest in one of the proposed projects. The cost of that project is $50,000 and cash inflows and outflows are projected for 5 years, as shown in the below table. Calculate the Internal Rate of Return (IRR) of the Project using the given interest rate and the rate of 8%. The interest rate is 5%.
ABC Company Limited looking to invest in one of the proposed projects. The cost of that project is $50,000 and cash inflows and outflows are projected for 5 years, as shown in the below table. Calculate the Profitability Index of the Project using the given interest rate and 8%. The interest rate is 5%. Years Cash Inflows Cash Outflows 0 (50,000.00) 1 20,000.00 5,000.00 2 14,000.00 2,000.00 3 12,000.00 2,000.00 4 12,000.00 2,000.00 5 15,000.00 1,000.00 Net Present Value
Royal Arts Company has invested 18000 as the initial investment into a new project. the following are the expected cash flows from the project. the appropriate discount rate is 5% what is the NPV of the project?Year 1 11000Year 2 8000Year 3 2000
The business is considering a project and is not sure which of these two projects to embark on. The initial investment is £15,000, and the interest rate is 2%, estimating that the investment will provide the following cashflows for 5 years: Project A (£) Project B (£) CF1 2,000 5000 CF2 8000 6000 CF3 9000 1000 CF4 3000 4000 CF5 5000 2400 You must explain to the Board the viability of this investment using the net present value (NPV) criterion. Based on the above information, answer the following question • What is the NPV of each investment? • Is the investment viable? If yes, why? Simple Interest and Compound Interest 1. One of the directors suggested that the company invests £4200 in a Platinum Saver Account which pays 6.3% interest per annum. How much simple interest will the company receive after 4 years? 2. He also suggested investing £1200 for four years, and wondered how much that investment will be worth if they paid 12%…
Charlie Charlie Ltd is considering investing in equipment to make a new product. The machine would cost £500,000 and would be sold after 6 years for an estimated £200,000. The production would generate net positive cashflows as follows: Year Net operating cashflow (£) 1 80,000 2 80,000 3 90,000 4 100,000 5 110,000 6 120,000 The company has a cost of finance of approximately 10% pa. Calculate: The Payback Period (assume the operating cashflows are spread evenly over each year) The Accounting Rate of Return based on average investment The NPV (assume here that operating cashflows occur at the end of each year) The IRR (try 15% for the other rate)
Ajeet Construction Ltd is planning to take a project which initial cash outflow is 100000.The expected cash inflows from this are tk 40000, tk25,000, tk 20000,tk 35,000, & tk.35000. Calculate the NPV & IRR of this project, when rate of cost of capital is 15%.
HSJ Foods is getting ready to produce a new line of products by investing 185000 OMR. The investment will result in additional cash flows of 52500 OMR , 81250, and 120000 over the next three years. What is the payback period for this project? Select one: a. 1.53 years b. 1.84 years c. 2.62 years d. None of these e. 2.42 years

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