A project has an NPV of $44,000. Calculate the cost of capital of this project if...
A project has an NPV of $44,000. Calculate the cost of capital of this project if it generates the following cash flows for six years after an initial investment of $190,000: (Round answer to 2 decimal places, e.g. 25.25%.)
| Year 1: | $44,000 | ||
| Year 2: | $44,000 | ||
| Year 3: | $25,000 | ||
| Year 4: | $72,000 | ||
| Year 5: | $56,000 | ||
| Year 6: | $67,000 |
cost of capital= ?%
Homework Answers
NPV=Present value of inflows-Present value of outflows
Present value of inflows=(44000+190,000)=$234000
Let cost of capital be x%
At this rate;Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
234000=44000/1.0x+44000/1.0x^2+25000/1.0x^3+72000/1.0x^4+56000/1.0x^5+67000/1.0x^6
Hence x=cost of capital=7.69%(Approx)
Add Answer to:
A project has an NPV of $44,000. Calculate the cost of capital
of this project if...
For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash Flow...
For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash Flow 0 $ 149,000 O 1 67,000 72,000 N 56,000 w a. 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.) b. At a required return of 21 percent, what is the NPV of the project? (A negative answer should be indicated by a minus...
A project has the following cash flows: Year Cash Flow $ 68,000 -44,000 - 31,600 a....
A project has the following cash flows: Year Cash Flow $ 68,000 -44,000 - 31,600 a. What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the NPV of this project if the required return is 4 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places,...
NPV A project has an initial cost of $61,975, expected net cash inflows of $15,000 per...
NPV A project has an initial cost of $61,975, expected net cash inflows of $15,000 per year for 10 years, and a cost of capital of 13%. What is the project's NPV (Hint: Begin by constructing a timeline.) Do not round Intermediate calculations. Round your answer to the nearest cent. A project has an initial cost of $60,000, expected net cash inflows of $14,000 per year for 7 years, and a cost of capital of 8%. What is the project's...
Consider the following project of Hand Clapper, Inc. The company is considering a four-year project to...
Consider the following project of Hand Clapper, Inc. The company is considering a four-year project to manufacture clap-command garage door openers. This project requires an initial investment of $16.3 million that will be depreciated straight-line to zero over the project’s life. An initial investment in net working capital of $1,030,000 is required to support spare parts inventory; this cost is fully recoverable whenever the project ends. The company believes it can generate $13.5 million in pretax revenues with $5.4 million...
1) A machinery upgrade project will cost $14 million, and produce cost savings of $1 million...
1) A machinery upgrade project will cost $14 million, and produce cost savings of $1 million in perpetuity. What is the project NPV if the required rate of return is 11%? Enter answer in millions, to two decimal places. 2) Your company is considering a project that requires an initial investment of $12 million, and is expected to produce cash flows of $4 million each year for 10 years. At the end of year 11, the project will require site...
Problem 6-15 Project NPV and IRR A project requires an initial investment of $100,000 and is...
Problem 6-15 Project NPV and IRR A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $26,700 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 9%. Ignore inflation. a. Calculate project...
NPV A project has an initial cost of $67,750, expected net cash inflows of $15,000 per year for 8 years, and a cost of capital of 14%. what is the project's NPV? (Hint: Begin by constructing a ti...
NPV A project has an initial cost of $67,750, expected net cash inflows of $15,000 per year for 8 years, and a cost of capital of 14%. what is the project's NPV? (Hint: Begin by constructing a time lin Do not round intermediate calculations. Round your answer to the nearest cent.
NPV A project has an initial cost of $67,750, expected net cash inflows of $15,000 per year for 8 years, and a cost of capital of 14%. what is...
A.) Calculate the payback period for this project. B.) Calculate the NPV for this project. C.)...
A.) Calculate the payback period for this
project.
B.) Calculate the NPV for this project.
C.) Calculate the IRR for this project.
Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $140,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $855,000 per year. The fixed costs associated with this will be $212,000 per year, and variable...
What is the NPV of a project which reauires an initial investment od $100,000, generates cash...
What is the NPV of a project which reauires an initial investment od $100,000, generates cash flows kf $25,000, $50,000, $75,000, and $100,000 in years 1 through 4, then requires another investment of $50,000 in year 5? The required rate of return is 12%. A. $100,000 B. $29,116 C. $50,745 D. $79,116
o What is the NPV for a project is cost of capital is 15 percent and...
o What is the NPV for a project is cost of capital is 15 percent and its initial after-tax cost is $5.000,000 and it is expected to provide ater-tax cperating cash inflows of 51,380.000 in year 1.31.300.000 in year 2. 1.300.000 years and 513000 O A 53711 472 OB. $137053 OC. $1.200.28) OD. 51.100.000
For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash Flow 0 $ 149,000 O 1 67,000 72,000 N 56,000 w a. 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.) b. At a required return of 21 percent, what is the NPV of the project? (A negative answer should be indicated by a minus...
A project has the following cash flows: Year Cash Flow $ 68,000 -44,000 - 31,600 a. What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the NPV of this project if the required return is 4 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places,...
NPV A project has an initial cost of $61,975, expected net cash inflows of $15,000 per year for 10 years, and a cost of capital of 13%. What is the project's NPV (Hint: Begin by constructing a timeline.) Do not round Intermediate calculations. Round your answer to the nearest cent. A project has an initial cost of $60,000, expected net cash inflows of $14,000 per year for 7 years, and a cost of capital of 8%. What is the project's...
Problem 6-15 Project NPV and IRR A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $26,700 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 9%. Ignore inflation. a. Calculate project...
NPV A project has an initial cost of $67,750, expected net cash inflows of $15,000 per year for 8 years, and a cost of capital of 14%. what is the project's NPV? (Hint: Begin by constructing a time lin Do not round intermediate calculations. Round your answer to the nearest cent.
NPV A project has an initial cost of $67,750, expected net cash inflows of $15,000 per year for 8 years, and a cost of capital of 14%. what is...
A.) Calculate the payback period for this
project.
B.) Calculate the NPV for this project.
C.) Calculate the IRR for this project.
Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $140,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $855,000 per year. The fixed costs associated with this will be $212,000 per year, and variable...
o What is the NPV for a project is cost of capital is 15 percent and its initial after-tax cost is $5.000,000 and it is expected to provide ater-tax cperating cash inflows of 51,380.000 in year 1.31.300.000 in year 2. 1.300.000 years and 513000 O A 53711 472 OB. $137053 OC. $1.200.28) OD. 51.100.000
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago