Question

Question 3 (1 point) A firm is considering an investment project that costs $250,000 today and $250,000 in one year, but would produce benefits of $50,000 a year, starting in one year, forever. What is the NPV of this investment project if the firm applies an annual discount rate of 6.3% to all future cash flows? Your Answer: Answer Question 4 (1 point) Rockmont Recreation Inc. is considering a project that has the following cash flow and WACC (weighted average cost of capital) data. What is the project's NPV in $? (Enter your answers as a number rounded to 2 decimal places) WACC 12 % Year Cash Flow (S) 0 -1000 300 2 400 3 400 4 600 Your Answer: Answer Next Page Page 1 of 3

Answer 1

PV of perpetual CF = Perpetual CF/(interest rate)

PV of perpetual CF = 50000/(0.063)

PV of perpetual CF = 793650.79

Project
Discount rate	0.063
Year	0	1
Cash flow stream	-250000	543650.8
Discounting factor	1	1.063
Discounted cash flows project	-250000	511430.7
NPV = Sum of discounted cash flows
NPV Project =	261430.66
Where
Discounting factor =	(1 + discount rate)^(Corresponding period in years)
Discounted Cashflow=	Cash flow stream/discounting factor

Please ask remaining parts seperately