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Enter question A project has an initial cost of $52,125, expected net cash inows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the projegt's NPV? (Hint: Begin by constructing a time line.)

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Initial Inv is CF0 = -$52,125 CF1 to CF8 = $12000 pa Cost of capital Kd = 12% NPV = CF0 + Cf1/(1+kd)^1 + Cf2/(1+kd)^2 +......+Cf8/(1+kd)^8 ie NPV = CF0 + PV of Annuity of $12000 for 8 yrs at Disc rate of 12% ie NPV = CF0 + PMT*(1/i - 1/(i(1+i)^n)) where we have PMT=$12000, n=8 & i=12% ie NPV = -52125 + 12000*(1/12% -1/(12%*(1+12%)^8)) = $7,486.68

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So Project's NPV is $7,486.68 View comments (1)

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Practice with similar questions Q: A project has an initial cost of $38,770 expected net cash inows of $10,690 per year for 11 years, and a cost of capital of 11.15%. What is the project's MIRR? Answer is either: a).16.81% b).14.15% c).13.81% d).12.48% e).16.64%

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A: See answer Q: (10.1) NPV A project has an initial cost of $40,000, expected net cash inows of $9,000 per year for 7 years, and a cost of capital of 11%. What is the project's NPV? Begin by constructing a time line. A: See answer

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Questions viewed by other students Q: A project has an initial cost of $52,125, expected net cash inows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's NPV? (Hint: Begin by constructing a time line.) , What is the project IRR? What is the project's payback period? What is the project's discounted period? A: See answer

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Q: A project has an initial cost of $52,125, expected net cash inows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's NPV, IRR, MIRR, PI, payback period and discounted payback period?

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Your division is considering two investment projects, each of which requires an up-front expenditure of $15 million. You estimate that the investments will produce the following net cash ows:

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Year

Project A

Project B

1

$5,000,000

$20,000,000

2

$10,000,000

$10,000,000

3

$20,000,000

$6,000,000

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a. What are the two project’s net present values, assuming the cost of capital is 5%? 10%? 15% · 5%:

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b. What are the two project’s IRR at these same costs of capital?

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at 5% cost of capital NPVofproject A = -15000000 + 5000000/1.05+ 10000000/1.05^2 + 20000000/1.05^3 =16108951.5171 Financial & Managerial...

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NPV of project B = -15000000 + 20000000/1.05+ 10000000/1.05^2 + 6000000/1.05^3 = 18300939.4234

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at 10% cost of capital NPVofproject A = -15000000 + 5000000/1.10+ 10000000/1.10^2 + 20000000/1.10^3 =12836213.3734

NPV of project B = -15000000 + 20000000/1.10+ 10000000/1.10^2 + 6000000/1.10^3 = 15954169.7971 at 15% cost of capital NPVofproject A = -15000000 + 5000000/1.15+ 10000000/1.15^2 + 20000000/1.15^3 =10059587.4086

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NPV of project B = -15000000 + 20000000/1.15+ 10000000/1.15^2 + 6000000/1.15^3 = 13897838.4154 Tihamiyou B. University of Orego…

IRR ofproject A = 43.97% Edward A. View comments (2)

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IRRofproject B = 82.03%

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Practice with similar questions Q: NPV Your division is considering two investment projects, each of which requires an up-front expenditure of $19 million. You estimate that the investments will produce the following net cash ows: Year Project A Project B 1 $

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A: See answer Q: Your division is considering two investment projects, each of which requires an up-front expenditure of $19 million. You estimate that the investments will produce the following net cash ows: Year Project A Project B 1 $ 5,000,000 $20,000,000 2 10,000,000 10,000,000 3 20,000,000 6,000,000 What are the two projects' net present values, assuming the cost of capital is 5%? Round your... A: See answer Show more

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Questions viewed by other students Q: Your division is considering two investment projects, each of which requires an up-front expenditure of $15 million. You estimate that the investments will produce the following net cash ows: Year Project A Project B 1 $5,000,000 $20,000,000 2 10,000,000 10,000,000 3 20,000,000 6,000,000 A) What are the two projects' net present values, assuming the cost of capital is 5%? 10%? 1... A: See answer

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Q: Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You estimate that the cost of capital is 10% and that the investments will produce the following after-tax cash ows (in millions of dollars): Year Project A Project B 1 520 2 10 10 3 15 8 4 20 6 a. What is the regular payback period for each of the projects? b. What... A: See answer Show more

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Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year’s capital budget. The projects are independent. The cash outlay for the truck is $17,100 and that for the pulley system is $22,430. The rm’s cost of capital is 14%. After-tax cash ows, including depreciation, are as follows:

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Year  Truck   Pulley 1  $5,100  $7,500 2  5,100  7,500 3  5,100  7,500

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4  5,100  7,500

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5  5,100  7,500 Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept–reject decision for each.

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Use spreadsheet for the required computations. Enter values and formulas in the spreadsheet as shown in the image below.

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this year's capital budget. The projects are independent. The cash outlay for the truck is $19,000, and that for the pulley system is $20,000. The rm's cost of capital is 12%. After-tax cash ows, including depreciation, are as follows: Year Truck Pulley 1 $5,10... A: See answer

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Q: NPVs, IRRs, and MIRRs for Independent Projects Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are independent. The cash outlay for the truck is $15,000 and that for the pulley system is $21,000. The rm's cost of capital is 11%. After-tax cash ows, including depreciation, are... A: See answer

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Questions viewed by other students Q: Davis Industries must choose between a gas- powered and an electric-Powered forklift truck for moving materials in its factory. Since both forklifts perform the same function, the rm will choose only one. (they are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $22,000, wheras the gas-powered truck... A: See answer

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Q: Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year A: See answer

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Davis Industries must choose between a gas- powered and an electric-Powered forklift truck for moving materials in its factory. Since both forklifts perform the same function, the rm will choose only one. (they are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $22,000, wheras the gas-powered truck will cost $17,500. The cost of capital that applies to both investments is 12%. The life for both types of truck is estimated to be 6 years, during which time the net cash ows for the electric-powered truck will be$6,290 per year and those for the gaspowered truck will be $5,000 per year. Annual net cash ows include depreciation expenses. Calculate the NPV andIRR for each type of truck, and decide which to recommend.

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Note: Basing on the NPV decision rule, the Electric-powered truck has got highest and postive Net Present Value (NPV). Hence, i recommended to Electric-powered truck.

Practice with similar questions Q: Davis Industries must choose between a gas- powered and an electric-Powered forklift truck for moving materials in its factory. Since both forklifts perform the same function, the rm will choose only one. (they are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $22,000, wheras the gas-powered truck... A: See answer

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Q: Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the rm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $21,000, whereas the gas-powered... A: See answer Show more

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projects%u2019 NPV%u2019s, IRR%u2019s, MIRR%u2019s and PI%u2019s assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually... A: See answer Q: After discovering a new gold vein in the Colorado mountains, CTC Mining Corporation must decide whether to go ahead and develop the deposit. The most cost-effective method of mining gold is sulfuric acid extraction, a process that results in environmental damage. Before proceeding with the extraction, CTC must spend $900,000 for new mining equipment and pay $165,000 for its... A: See answer

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