Chaquille's K-House, Inc. made an investment in a project with an initial cost of $11,205,051. This investment was for 8 years and had no residual value. The company expects to receive yearly net cash inflows of $2,611,900. Management is requiring a return of 12% on the investment.(Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. What is the IRR for the project? Is this a good investment?Inital Investment / Annual Net Cash Flow = Annuity PV FactorPresent value factor of an annuity of $11 − (1 + r)rAnnuity FactorRate Periods Annuity Factor12% 814% 816% 8=17% 8nIInitial InvestmentNPV of the Projectwhere r==rate, and n=2. Use the rate closest to the calculated Annuity PV factor that creates a positive NPV.3. Is this an attractive investment? Select an answer# of periods.Chaquille's K-House, Inc. Net Cash Inflow Annuity PV Factor Present ValuePV of annuity

Net Present Value (NPV) is the difference between the present value of cash inflows and the present…

Chaquille's K-House, Inc. made an investment in a project with an initial cost of $11,205,051. This investment was for 8 years and had no residual value. The company expects to receive yearly net cash inflows of $2,611,900. Management is requiring a return of 12% on the investment.

Chaquille's K-House, Inc. made an investment in a project with an initial cost of $11,205,051. This investment was for 8 years and had no residual value. The company expects to receive yearly net cash inflows of $2,611,900. Management is requiring a return of 12% on the investment.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 13P

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Question

(Round your answers to two decimal places when needed and use rounded answers for all future calculations).

1. What is the IRR for the project? Is this a good investment?
Inital Investment / Annual Net Cash Flow = Annuity PV Factor
Present value factor of an annuity of $1
1 − (1 + r)
r
Annuity Factor
Rate Periods Annuity Factor
12% 8
14% 8
16% 8
=
17% 8
n
I
Initial Investment
NPV of the Project
where r
=
=
rate, and n
=
2. Use the rate closest to the calculated Annuity PV factor that creates a positive NPV.
3. Is this an attractive investment? Select an answer
# of periods.
Chaquille's K-House, Inc. Net Cash Inflow Annuity PV Factor Present Value
PV of annuity

Definition Definition Transfer of funds into a company by any third party, which may happen due to any operational, investing, and financing activities. The cash inflow includes payments made by customers or investments made by the investors into the company by purchasing its equity.

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