Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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What is the equivalent annual cost for a project that requires a $50,000 investment at time-period zero, and a $10,000 annual expense during each of the next 4 years, if the
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- A project has an initial cost of $61,450, expected net cash inflows of $11,000 per year for 10 years, and a cost of capital of 8%. What is the project's MIRR? Round your answer to two decimal places.arrow_forwardWhat is the NPV of a project that costs $38,000 today and is expected to generate annual cash inflows of $9,000 for the next 7 years, followed by a final inflow of $15,000 in year 8. Cost of capital is 7.4%. Round to the nearest cent.arrow_forwardPerform a financial analysis for a project. Assume that the projected costs and benefits for this project are spread over 6 years as follows. Estimated costs are $1,100,000 in Year 0, and $50,000 each year in Years 1, 2, 3, 4, 5 and 6. Estimated benefits are $0 in Year 0, and $450,000 each year in Years 1, 2, 3, 4, 5 and 6. Use a 15% discount rate. Suppose the required payback period and discounted payback period are both 3 years. (1) Calculate the payback period (based on the original cash flows without discounting), and evaluate the project based on the payback method. (2) Calculate the discounted payback period (based on discounted cash flows), and evaluate the project based on the discounted payback method. (3) Evaluate the project using the NPV method, and explain whether you would recommend investing in this project.arrow_forward
- A project has an initial cost of $60,000, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 13%. What is the project's payback period? Round your answer to two decimal places.arrow_forwardIf your project has a NPW of $141,000, your MARR is 7% per year and your project duration is 11 years, what is the annual equivalent worth?arrow_forwardA project has an initial cost of $45,000, expected net cash inflows of $9,000 per year for 10 years, and a cost of capital of 10%. What is the project's MIRR?arrow_forward
- A project requires a $3 million investment in net working capital (NWC) today, and will be fully recovered in 10 years. What is the PV of the NWC cash flows if r = 0.12 per annum? Enter answer in millions of dollars, rounded to the nearest thousandth (3rd digit), as in "1.123" million.arrow_forwardA project requires an increase in inventories, accounts payable, and accounts receivable of $120,000, $50,000, and $80,000, respectively. If opportunity cost of capital is 9% and the project has a life of 13 years, and the working capital investments will be recovered at the end of the life of the project, what is the effect on the NPV of the project? Enter your answer rounded to two decimal places. Enter your response below. Numberarrow_forward(4) Evaluate the ROI.arrow_forward
- 9) A project has an initial cost of $65,000, expected net cash inflows of $11,000 per year for 9 years, and a cost of capital of 13%. What is the project's payback period? Round your answer to two decimal places. _____yearsarrow_forwardWhat is the Profitability Index of a project that costs $28,000 today and is expected to generate annual cash inflows of $3,000 for the following 11 years. Cost of capital is 7%. Round to two decimal places.arrow_forwardharrow_forward
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