You are considering opening a new plant. The plant will cost $100.3 million up front and will take one year to build. After that it is expected to produce profits of $29.8 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 7.2%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. The NPV of the project will be $ million. (Round to one decimal place.) make the investment. (Select from the drop-down menu.) You The IRR is%. (Round to two decimal places.) The maximum deviation allowable in the cost of capital estimate is%. (Round to two decimal places.)

You are considering opening a new plant. The plant will cost $100.3 million up front and will take one year to build. After that it is expected to produce profits of $29.8 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 7.2%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. The NPV of the project will be $ million. (Round to one decimal place.) make the investment. (Select from the drop-down menu.) You The IRR is%. (Round to two decimal places.) The maximum deviation allowable in the cost of capital estimate is%. (Round to two decimal places.)

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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You are evaluating a project that will cost $502,000, but is expected to produce cash flows of $127,000 per year for 10 years, with the first cash flow in one year. Your cost of capital is 10.7% and your company's preferred payback period is three years or less. a. What is the payback period of this project? b. Should you take the project if you want to increase the value of the company? a. What is the payback period of this project? The payback period is years. (Round to two decimal places.) b. Should you take the project if you want to increase the value of the company? (Select from the drop-down menus.) If you want to increase the value of the company you take the project since the NPV is will not will
You are considering making a movie. The movie is expected to cost $10.2 million upfront and take a year to produce. After that, it is expected to make $4.8 millions in the year it is released and $1.8 millions 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 a positive NPV if the cost of capital is 10.1%? (Round all answers to one decimal place.) What is the payback period of this investment? The payback period is _____ years.
You are negotiating the rights to mine a gold field for the next 30 years. The initial investment, all the equipment and the operating license, would cost you a million dollars upfront. Then you think you can mine 400 ounces of gold a year. An ounce is currently trading at $ 200 and you expect the price of gold to grow 4% per year. Your discount rate is 11%. Calculate NPV of this project. Based on these elements, would you launch the project? With a 12% capital requirement, is your decision changed?
Scream Ice Cream is considering a project that is expected to cost $98900 today; produce annual cash flows of $12500 forever (with the first CF expected in 1 year); and have an NPV of $3000. What is the cost of capital for the project?
Please compute this manually and make sure it is easy to read and understand. Harry Dukee has been presented with an investment opportunity which will yield end of year cash flows of P30,000 per year in years 1 through 4; P35,000 per year in years 5 through 9; and P40,000 in year 10. This investment will have a cost of P250,000 today and the cost of capital is 10%. What is the Net Present Value?
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 $4.3 million in the year it is released and $2.1 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 10.1%?
None
Caspian Sea Drinks is considering buying the J - Mix 2000. It will allow them to make and sell more product. The machine cost $1.92 million and create incremental cash flows of $582, 193.00 each year for the next five years. The cost of capital is 9.20 %. What is the profitability index for the J - Mix 2000?
You are considering making a movie. The movie is expected to cost $10.7 million up front and take a year to produce. After that, it is expected to make $4.6 million in the year it is released and $1.6 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 10.1%? www
Please show detailed steps and correct.
You are making a $120,000 investment and feel that a 22% rate of return is reasonable, given the nature of the risks involved. You expect to receive $48,000 in the first year, $54,000 in the second year, and $76,000 in the third year. You expect to pay out $12,000 as a disposal cost in the fourth year. What is the net present value of this investment given your expectations?
Television is considering a project with an initial outlay of $X (you will have to determine this amount). It is expected that the project will produce a positive cash flow of $54,000 a year at the end of each year for the next 13 years. The appropriate discount rate for this project is 8 percent. If the project has an internal rate of return of 13 percent, what is the project's net present value? *** a. If the project has an internal rate of return of 13%, then the project's initial outlay is $ the nearest cent.) (Round to

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