HomeworkLib
Question

A project has an initial cost of $31,800 and a market value of $29,600. What is...

A project has an initial cost of $31,800 and a market value of $29,600. What is the difference between these two values called?

Net present value

Accounting return

Payback value

Profitability index

Discounted payback

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

Homework Answers

Answer #1

Answer: Net present value

Net present value means present value of cash inflows minus present value of cash out flows. Present value of cash flows arrived by discounting the cash flows with discount rate applicable for that project in market.

0 0
Add a comment
Know the answer?
Add Answer to:
A project has an initial cost of $31,800 and a market value of $29,600. What is...
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. A project has an initial cost of $27,400 and a market value of $32,600. What...

    1. A project has an initial cost of $27,400 and a market value of $32,600. What is the difference between these two values called? A. net present value B. internal return C. payback value D. profitability index E. discounted payback 2. What is the net present value of a project with the following cash flows if the required rate of return is 9 percent? Year Cash Flow -$42,398 18,201 21,219 17,800 A. -$1,574.41 B. -$1,208.19 C. $5,904.65 D. $6,029.09 E....

  • Please solve it by hand so that I can understand the steps. 6. A project has...

    Please solve it by hand so that I can understand the steps. 6. A project has the following total (or net) after-tax cash flows.                ____________________________________________________         Year             Total (or net) after-tax cash flow                ____________________________________________________                   1 $1,000,000 2 1,500,000 3 2,000,000 4 2,500,000                   _______________________________________________________ The required rate of return on the project is 15 percent. The initial investment (or initial cost or initial outlay) of the project is $4,000,000. a) Find the (regular) payback period of...

  • Which of the following methods of project analysis are biased towards short-term projects? O Payback and...

    Which of the following methods of project analysis are biased towards short-term projects? O Payback and profitability index O Profitability index and internal rate of return O Discounted payback and payback O Profitability index and discounted payback O Net present value and payback

  • 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...

  • 5. Which of the following is/are correct? A. If the salvage value is the same as...

    5. Which of the following is/are correct? A. If the salvage value is the same as the book value of the asset, then there is a tax effect. B. Book value = initial cost - accumulated depreciation C. After-tax salvage = salvage - Tax Rate x (salvage - book value) D. Both B and C 6. ________ is the most important alternative to Net Present Value. A. IRR B. Payback Method C. Average Accounting Return D. Discounted Payback 7. The...

  • You are considering a project that will require an initial outlay of $400,000. This project has...

    You are considering a project that will require an initial outlay of $400,000. This project has an expected life of four years and will generate after-tax cash flows to the company as a whole of $120,000 at the end of each year over its five-year life. Thus, the free cash flows associated with this project look like this: Year Free Cash Flow 0 -150,000 1 120,000 2 120,000 3 120,000 4 120,000 Given a required rate of return of 20%...

  • If a company must choose between two mutually exclusive investment projects, the best general method to...

    If a company must choose between two mutually exclusive investment projects, the best general method to employ for decision-making purposes is: Cash-flow bailout Cash-flow break-even Net Present value (NPV) Discounted payback Accounting (book) rate of return, based on average investment over the life of each project The profitability index (PI) is calculated as: Net present value (NPV) divided by average investment New present value (NPV) divided by initial investment Average investment divided by net present value (NPV) Initial investment divided...

  • You are considering a project that will require an initial outlay of $200,000. This project has...

    You are considering a project that will require an initial outlay of $200,000. This project has an expected life of four years and will generate after-tax cash flows to the company as a whole of $60,000 at the end of each year over its five-year life. Thus, the free cash flows associated with this project look like this: Year Free Cash Flow 0 -150,000 1 60,000 2 60,000 3 60,000 4 60,000 Given a required rate of return of 10%...

  • 1. The time value of money refers to the fact that money has an opportunity cost,...

    1. The time value of money refers to the fact that money has an opportunity cost, i.e., its reinvestment rate. a. True b. False 2. If the payback period is used as the criterion for assigning priorities to investment projects, the highest priority will be assigned to projects with the shortest payback period. a. True b. False 3. The _______________ is the discount rate that makes the present value of the benefits generated by a project equal to the investment....

  • 1. You have just received notification that you have won the $2 million first prize in...

    1. You have just received notification that you have won the $2 million first prize in the Monarch Lottery. However, the prize will be awarded on your 55th birthday, 34 years from now. The appropriate discount rate is 8% What is the present value of your winnings? A $69,598.77 B $146,090.61 C $147,698.22 D $133,333.33 E $142,000.00 2. The difference between an investment's market value and its cost is the __? A net present value B profitability index C internal...

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