373510331-Essay-Questions PDF

Preview

Summary

 Essay QuestionsTable 9.Operating Cash Inflows $1,000 $1,000 $1,000 $1,000 $1,$2,(Initial outlay) Given the information in Table 9 and 15 percent cost of capital, (a) compute the net present value. (b) should the project be accepted?Answers: (a) NPV  1,000 (PVIFA15%,5) – 2,  1,000 (3) – 2,500  $...

Description

 EssayQuest i ons Ta bl e9 . 4 Ope r at i ngCas hI nflo ws $1 , 00 0

$ 1, 00 0

$ 1, 000

$1 , 0 0 0

$ 1, 00 0

$2 , 5 00 ( I n i t i a lo u t l a y) 1.

Gi v e nt hei n f o r ma t i oni nT a bl e9 . 4a nd1 5p e r c e n tc os to fc a pi t a l , ( a )c o mput et hene tpr e s e ntv a l ue . ( b)s h oul dt h ep r oj e c tb ea c c e p t e d? Ans we r s : ( a ) NPV 1 , 0 00( PVI F A1 5%, 5)–2 , 50 0  1, 00 0( 3. 35 2)–2, 50 0 $8 52 ( b ) Si n c eNPV>0,t h epr o j e c ts ho ul dbea c c e p t e d. Le v e lo fDi ffic ul t y:3 Le a r ni ngGoa l :3 T op i c :Ne tPr e s e ntVa l u e Ta bl e9. 5

$2 5, 000

$ 10, 00 0

Ope r a t i ngCa s hI nflows $5 0, 00 0 $1 0, 0 00 $10 , 0 00

–$ 100 , 00 0 ( I n i t i a lo u t l a y) 2.

Gi v e nt hei n f o r ma t i oni nT a bl e9 . 5a nd1 5p e r c e n tc os to fc a pi t a l , ( a )c o mput et hene tpr e s e ntv a l ue . ( b)s h oul dt h ep r oj e c tb ea c c e p t e d? Ans we r s : ( a ) Ye a r

CF

PVI F1 5%, t

PV

1

$2 5, 0 00

0 . 870

$ 21, 75 0

2

1 0, 0 00

0 . 756

7, 56 0

3

5 0, 0 00

0 . 658

32, 90 0

4

1 0, 0 00

0 . 572

5, 72 0

5

1 0, 0 00

0 . 497

4, 97 0

6

6 0, 0 00

0 . 432

25, 92 0 $9 8, 8 20

NPV 98 , 8 20–1 00 , 0 00 – $1, 18 0...