ON 4 (19 Marks) A project has an initial cost of $6,3 and $4,100 over the...

Question

Question

ON 4 (19 Marks) A project has an initial cost of $6,3 and $4,100 over the next four an of the last dividend paid. b. A projec

business finance

Answer 1

Answer #1

a]	Payback period is the time taken for the cash inflows to
	recoup the initial investment.
	Year	Cash flow	Cumulative cash flow
	0	$ -6,500	$ -6,500
	1	$ 900	$ -5,600
	2	$ 2,200	$ -3,400
	3	$ 3,600	$ 200
	4	$ 4,100	$ 4,300
	Payback period = 2+3400/3600 =	2.94	Years
b]	The NPV is calculated below:
	Year	Cash flow	PVIF at 16%	PV at 16%
	0	$ -9,500	1.00000	$ -9,500.00
	1	$ 3,200	0.86207	$ 2,758.62
	2	$ 3,200	0.74316	$ 2,378.12
	3	$ 3,200	0.64066	$ 2,050.10
	4	$ 3,200	0.55229	$ 1,767.33
	5	$ 5,700	0.47611	$ 2,713.84
	NPV			$ 2,168.02

Answer 2

Similar Homework Help Questions

2. A project has an initial cost of $6,500. The cash inflows are $900, $2,200, $3,600,...

2. A project has an initial cost of $6,500. The cash inflows are $900, $2,200, $3,600, and $4,100 over the next four years, respectively. What is the payback period? Should you accept this project if your company imposes a cutoff period of 3 years? 2.94 years. Yes. Please Show All Work
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...
The Blue Goose is considering a project with an initial cost of $42,000 The project will...

The Blue Goose is considering a project with an initial cost of $42,000 The project will produce cash inflows of $8000 a year for the first 2 years and $12,000 a year for the next 3 years. What is the payback period?

Project ABC has an initial cost of $1,000 and generates cash inflow of $2,000 at the...

Project ABC has an initial cost of $1,000 and generates cash inflow of $2,000 at the end of year 1. Project QRS has an initial cost of $10,000 and has annual cash inflows of $4,400, $4,840, and $5,324 in year 1-3. Assuming a 10% discount rate, calculate the net present value and profitability index for both projects. Which project is better in terms of NPV? Which project is better in terms of PI?
A project has an initial cost of $55,000, expected net cash inflows of $11,000 per year...

A project has an initial cost of $55,000, expected net cash inflows of $11,000 per year for 10 years, and a cost of capital of 9%. What is the project's IRR? A project has an initial cost of $62,025, expected net cash inflows of $13,000 per year for 12 years, and a cost of capital of 10%. What is the project's MIRR? A project has an initial cost of $51,225, expected net cash inflows of $11,000 per year for 8...
Please use financial calculator to assist in showing the work. A project's initial cost is $8,500....

Please use financial calculator to assist in showing the work. A project's initial cost is $8,500. The project will produce cash inflows of $4,200 a year for 4 years with a final cash inflow of $6,700 in year 5. What is the net present value of this project if the required rate of return is 15 percent?

4. You are considering a project with an initial cost of $7,800. What is the payback...

4. You are considering a project with an initial cost of $7,800. What is the payback period for this project if the cash inflows are $1,100, $1,640, $3,800, and $4,500 a year over the next four years, respectively?
•A project has an initial cost of $18,000 and is expected to produce cash inflows of...

•A project has an initial cost of $18,000 and is expected to produce cash inflows of $7,000, $9,000, and $7,500 over the next three years, respectively. What is the discounted payback period if the required rate of return is 12 percent?
A project has an initial cost of $42,200, expected net cash inflows of $12,000 per year...

A project has an initial cost of $42,200, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 13%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places. A project has an initial cost of $56,300, expected net cash inflows of $14,000 per year for 9 years, and a cost of capital of 11%. What is the project's payback period? Round your answer to...

1. A project has an initial cost of $59,925, expected net cash inflows of $14,000 per...

1. A project has an initial cost of $59,925, expected net cash inflows of $14,000 per year for 6 years, and a cost of capital of 9%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places. 2. A project has an initial cost of $56,300, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's payback period? Round your...