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Q: net present value
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Q: You are considering making a movie. The movie is expected to cost $10.1 million up front and take a…
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A: Net Present Value: It represents the absolute profitability of a project or an investment in…
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A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…
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A: The question is based on the concept of Financial Management.
You are preparing to produce some goods for sale. You will sell them in one year and you will incur costs of
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- XYZ has a weighted avg cost of capital of 0.10. The firm is going to invest in a machine that will save XYZ 16 each year for the next 2 years and 19 every year after that. If the cost of the machine is 66, what would the net present value of the machine be?You started a business that takes $1,000,000 today. If the business produces $10,000,000 (just this cash only and nothing in between) in 20 years. If the interest rate is 10%, what is the value of the future cash flow from this investment today?You have bought property today for $600,000. You have estimated that it will provide monthly net cash flows of $10,000 and you think you could sell it for $800,000 in 5 years. What is the implied rate of return on this property?
- You are considering an investment in a clothes distributer. The company needs $106,000 today and expects to repay you $124,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 15%. What does the IRR rule say about whether you should invest? What is the IRR of this investment opportunity? The IRR of this investment opportunity is %. (Round to two decimal places.)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)You are considering making a movie. The movie is expected to cost 10.6 million up front and take a year to produce. After that, it is expected to make $4.7 million in the year it is released and $1.8 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.9% ?
- Consider the rental rate of capital for an appliance rental company such as Rent-A-Center. Suppose Rent-A-Center buys televisions at the market price (P) of $3,500 each and rents them out to customers. The company faces an interest rate (r) of 15% per year, and televisions depreciate at 15% per year. Fill in the following table with the interest cost per year and the loss due to wear and tear for each television per year. Borrowing cost per year Depreciation cost G Cost (Dollars per television) Assume that firms renting televisions earn zero profit. Using the information in the previous table, the rental rate of capital, in this case, is per year per television. s to Suppose the depreciation rate decreases due to improvements in the materials used to make televisions. This should cause the equilibrium rental rate Show Transcribed Text The last question option is either "Increase" or "Decrease".You are considering making a movie. The movie is expected to cost $10.1 million up front and take a year to produce. After that, it is expected to make $4.1 million in the year it is released and $1.9 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.9% 7 What is the payback period of this investment? The payback period is years. (Round to two decimal places)You are thinking of making an investment in a new factory. The factory will generate revenues of $1,960,000 per year for as long as you maintain it. You expect that the maintenance costs will start at $90,160 per year and will increase 5% per year thereafter. Assume that all revenue and maintenance costs occur at the end of the year. You intend to run the factory as long as it continues to make a positive cash flow (as long as the cash generated by the plant exceeds the maintenance costs). The factory can be built and become operational immediately and the interest rate is 6% per year. a. What is the present value of the revenues? - b. What is the present value of the maintenance costs? c. If the plant costs $19,600,000 to build, should you invest in the factory? EIER
- Your brother wants to borrow $10,750 from you. He has offered to pay you back $12,250 in a year. If the cost of capital of this investment opportunity is 11%, what is its NPV? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. If the cost of capital of this investment opportunity is 11%, the NPV of the investment is $ (Round to the nearest cent.)ou are preparing to produce some goods for sale. You will sell them in one year and you will incur costs of $ 76,000 immediately. If your cost of capital is 7%. What is the minimum dollar amount you need to sell the goods for in order for this to be a non-negative NPV? Question content area bottom Part 1 The minimum dollar amount is $XXX enter your response here .you want to invest in a new technology, which cost now $100.000. In 4-year long-term, it gives you $30.000 in the first year. And then in the, second year $32 000. and in the third year $20 000, then $60000. The cost of financing 12%. (a) How much is the NPV. (b) How much is the PI
