What is the net present value of the flier project, which is a 3-year project where Dispersion would spread fliers all over Fairfax? The project would involve an initial investment in equipment of $232,000.00 today. To finance the project, Dispersion would borrow $232,000.00. The firm would receive $232,000.00 from the bank today and would pay the bank $294,695.40 in 3 years (consisting of an interest payment of $62,695.40 and a principal payment of $232,000.00). Cash flows from capital spending would be $0.00 in year 1, $0.00 in year 2, and $30,500.00 in year 3. Operating cash flows are expected to be $144,900.00 in year 1, $99,400.00 in year 2, and -$28,200.00 in year 3. The cash flow effects from the change in net working capital are expected to be -$8,310.00 at time 0; -$21,700.00 in year 1; $12,100.00 in year 2, and $16,900.00 in year 3. The tax rate is 35.00 percent. The cost of capital is 7.45 percent and the interest rate on the loan would be 8.03 percent. O-$13,600.79 (plus or minus $10) -$4,796.12 (plus or minus $10) -$5,290.79 (plus or minus $10) -$38,186.38 (plus or minus $10) None of the above is within $10 of the correct answer

What is the net present value of the flier project, which is a 3-year project where Dispersion would spread fliers all over Fairfax? The project would involve an initial investment in equipment of $232,000.00 today. To finance the project, Dispersion would borrow $232,000.00. The firm would receive $232,000.00 from the bank today and would pay the bank $294,695.40 in 3 years (consisting of an interest payment of $62,695.40 and a principal payment of $232,000.00). Cash flows from capital spending would be $0.00 in year 1, $0.00 in year 2, and $30,500.00 in year 3. Operating cash flows are expected to be $144,900.00 in year 1, $99,400.00 in year 2, and -$28,200.00 in year 3. The cash flow effects from the change in net working capital are expected to be -$8,310.00 at time 0; -$21,700.00 in year 1; $12,100.00 in year 2, and $16,900.00 in year 3. The tax rate is 35.00 percent. The cost of capital is 7.45 percent and the interest rate on the loan would be 8.03 percent. O-$13,600.79 (plus or minus $10) -$4,796.12 (plus or minus $10) -$5,290.79 (plus or minus $10) -$38,186.38 (plus or minus $10) None of the above is within $10 of the correct answer

Name: What is the net present value of the flier project, which is a 3-year
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Description: What is the net present value of the flier project, which is a 3-year project where Dispersion would spread fliers all over Fairfax? The project would involve an initialinvestment in equipment of $232,000.00 today. To finance the project, Dispersion

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 12P

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