HomeworkLib
Question

A proposed project will cost $23,364 to build (today) and then will produce cash flows of $7,799 a year for 5 years (year 1 t

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Present value of cash inflows = Annuity * [1 - 1 / (1 + r)^n] / r

Present value of cash inflows = 7,799 * [1 - 1 / (1 + 0.04)^5] / 0.04

Present value of cash inflows = 7,799 * [1 - 0.821927] / 0.04

Present value of cash inflows = 7,799 * 4.451822

Present value of cash inflows = $34,719.76236

Present value of cash outflow = Future value / (1 + r)^n

Present value of cash outflow = 13,774 / (1 + 0.04)^5

Present value of cash outflow = 13,774 / 1.216653

Present value of cash outflow = 11,321.22397

NPV = Present value of cash inflows - present value of cash outflows

NPV = 34,719.76236 - 11,321.22397 - 23,364

NPV = $35

0 0
Add a comment
Know the answer?
Add Answer to:
A proposed project will cost $23,364 to build (today) and then will produce cash flows of...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 1. Calculate the NPV of the following project cash flows which come in at the end...

    1. Calculate the NPV of the following project cash flows which come in at the end of the year: $500 in Year 1, $700 in Year 2, and $1000 in Year 3; using a discount rate of 7%. The firm has a net expense of $1700 at the beginning of the project. (Round to the nearest whole number.) 2. What is the NPV if we use a discount rate of 3% instead? (Round to the nearest whole number.) 3. What...

  • your firm is considering an investment that will cost $920,000 today. the investment will produce cash...

    your firm is considering an investment that will cost $920,000 today. the investment will produce cash flows of $450,000 in year 1, $270,000 in years 2 through 4, and $200,000 in year 5. the discount rate that your firm uses for projects of this type is 12%. How much would the NPV change if discount rate increases to 14%?

  • Your firm is considering an investment that will cost $920,000 today. The investment will produce cash...

    Your firm is considering an investment that will cost $920,000 today. The investment will produce cash flows of $450,000 in year 1, $270,000 in years 2, 3 and 4, and $200,000 in year 5. The discount rate that your firm uses for projects of this type is 12%. How much would the NPV change if discount rate increases to 8%? ($45,813) ($95,214) $53,373 $102,774

  • 1. A proposed project has an initial cost of $69,500 and is expected to produce cash...

    1. A proposed project has an initial cost of $69,500 and is expected to produce cash inflows of $32,200, $50,500, and $43,000 over the next 3 years, respectively. What is the net present value of this project at a discount rate of 15.8 percent? $23,657.30 $21,763.60 $24,050.28 $24,933.59 2. A project has an initial cost of $19,000 and cash inflows of $4,200, $4,600, $11,600, and $5,750 over the next 4 years, respectively. What is the payback period? 4.22 years 2.88...

  • 4. Project S has a cost of $10,000 and is expected to produce cash flows of...

    4. Project S has a cost of $10,000 and is expected to produce cash flows of $3000 per year for 5 years. Project L has a cost of $25,000 and is expected to produce cash flows of $7400 for 5 years. Calculate the NPV and IRR of the two projects assuming a cost of capital of 12%. Which project would you select, assuming they are mutually exclusive, using each ranking method?

  • A proposed new venture will cost $85,000 and should produce annual cash flows of $30,000, $55,000,...

    A proposed new venture will cost $85,000 and should produce annual cash flows of $30,000, $55,000, $40,000, and $40,000 for Years 1 to 4, respectively. The discount rate is 10 percent. What is the discounted payback period? What is IRR?

  • (U15) value: 4.00 points A project has the following cash flows: Year نے نہ دیا Cash...

    (U15) value: 4.00 points A project has the following cash flows: Year نے نہ دیا Cash Flow -$16,200 6,900 8,200 6,700 What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations a round your answer to the nearest whole number, e.g., 32.) NPV What is the NPV at a discount rate of 10 percent? (Do not round intermediate calculations and roun your answer to 2 decimal places, e.g., 32.16.) NPV

  • A) A project that provides annual cash flows of $14369 for eight years costs $77894 today....

    A) A project that provides annual cash flows of $14369 for eight years costs $77894 today. What is the NPV for the project if the required return is 7 percent? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16)) B) A project that provides annual cash flows of $17545 for eight years costs $75634 today. What is the NPV for the project if the required return is 19 percent? (Negative amount...

  • A project that provides annual cash flows of $14369 for eight years costs $77894 today. What...

    A project that provides annual cash flows of $14369 for eight years costs $77894 today. What is the NPV for the project if the required return is 7 percent? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16)) A project that provides annual cash flows of $17545 for eight years costs $75634 today. What is the NPV for the project if the required return is 19 percent? (Negative amount should be...

  • A project that provides annual cash flows of $2,650 for nine years costs $10,900 today. At...

    A project that provides annual cash flows of $2,650 for nine years costs $10,900 today. At a required return of 8 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV At a required return of 24 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT