Dalvi Incorporated is considering a new Investment. The table below lists the cash flows. Year Cash Flows -$25,400 1 $6,300 2 $7,700 3 $11,400 Calculate the Payback period Calculate the NPV and IRR. Assume that the interest rate is 0%.

Dalvi Incorporated is considering a new Investment. The table below lists the cash flows. Year Cash Flows -$25,400 1 $6,300 2 $7,700 3 $11,400 Calculate the Payback period Calculate the NPV and IRR. Assume that the interest rate is 0%.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Q: Sentinel Company is considering an investment in technology to improve its operations. The…

A: Payback period is time required to recover initial investment.

Q: Dalvi Incorporated is considering a new Investment. The table below lists the cash flows. Assume…

A: Capital budgeting indicates the evaluation of the profitability of possible investments and projects…

Q: 2. During the current year, Black Rose Inc. had an investment of P 200,000 that is expected to…

Q: Foster Manufacturing is analyzing a capital investment project that is forecast to produce the…

Q: Park Co. is considering an investment that requires immediate payment of $27,000 and provides…

A: Investment refers to the sum amount of money or payment made in order to acquire some form of…

Q: PAR Ltd is considering an investment and has determined the following: Expected net cash flows:…

A: Accounting rate of return means how much average annual profit can be earned on average investment…

Q: [The following information applies to the questions displayed below.] A company is considering…

A: Internal rate of return at which present value of cash flow is equal to initial investment and net…

Q: Find the Payback Period for Oman Packaging company if the initial investment is 15000 OMR and the…

Q: A cash flow sequence has a receipt of $10,000 today, followed by a disbursement of $9,000 at the end…

Q: Sentinel Company Is considering an Investment In technology to Improve Its operations. The…

A: This question is related to the capital budgeting decisions and it is using the NPV, Payback period…

Q: Alfarsi Industries uses the net present value method to make investment decisions and requires a 15%…

A: Present Value: The value of today’s amount to be paid or received in the future at a compound…

Q: Pena Company is considering an investment of $29,480 that provides net cash flows of $8,900 annually…

A: NPV :— NPV is one of the Capital Budgeting techniques which help to Find out whether project is…

Q: Touche Manufacturing is considering a rearrangement of its manufacturing operations. A consultant…

A: Present value factor of Rs 1 for 12% discounting rate for year 1 = 0.893 Present value…

Q: ou are given three investment alternatives to analyze. The cash flows from these three investments…

A: Let CFn = Cashflow in year n Discount rate (r) = 13%

Q: Hsung Company accumulates the following data concerning a proposed capital investment: cash cost…

A: Net present value = Present value of cash inflows - Initial investment. If the net present value is…

Q: what is the present value of this investment?

A: Present Value = C x [1 – [ (1 / 1 + r)^n] / r] Here, C = Cash Flow per period i.e. $21000 r =…

Q: Tennessee Corporation is analyzing a capital expenditure that will involve a cash outlay of…

A: Internal rate of return = Internal rate of return is a discount rate at the the present value of all…

Q: Susmel Inc. is considering a project that has the following cash flow data. The project's regular…

A: Introduction: Payback period: Usually, payback period is expressed in years, which takes a capital…

Q: XYZ Company is deciding whether or not they will push through with Project A, considering that they…

A: The capital investment decisions refer to the selection of the capital project based on the…

Q: A. Payback. The company requires all projects to payback within 3 years. Calculate the payback…

A: Payback period = Year of last negative cash flow + (Absolute value of last negative cash flow/Next…

Q: Find the Net Present Value (NPV) for Oman Computer company if the initial investment is 5000 OMR and…

A: Net Present Value is the capital budgeting technique that can be used by investors for evaluating…

Q: DON Corp. is contemplating the purchase of a machine that will produce cash savings of $24,000 per…

A: Time period of savings = 5 years Cash Flow per year = 24,000 Realized Value at end = 5,400 End of…

Q: Assume that Linda Company is to make an investment of uneven cash payments for three years as…

A: Interest rate = 10% End of year 1 payment = P 200,000 End of year 2 payment = P 300,000 End of year…

Q: Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$…

A: Therefore, the MIRR of the project using the discounting approach is 19.43%.

Q: erez Company is considering an investment of $26,945 that provides net cash flows of $8,500 annually…

A: Internal rate of return is the rate at which the present value of cash inflows will be equal to the…

Q: year Net cash flows Net profit 1 20000 2500 2 17500 3500 3 15000 4500 4 12500 5500 5 10000 6500…

A: Accounting Rate of return: It refers to that average return that is computed on average investment…

Q: Dalvi Incorporated is considering a new Investment. The table below lists the cash flows. Year Cash…

A: Payback period is one of the capital budgeting technique which aims to ascertain the time required…

Q: Beyer Company is considering the purchase of an asset for $240,000. It is expected to produce the…

A: calculation of payback period are as follows

Q: Social Circle Publications Inc. is considering two new magazine products. The estimated net cash…

A: A. Payback period year Sound cellar cash flows cumulative cash flows PRO Gamer Cash flows…

Q: Kumi Ltd is considering an investment in a project, which requires an immediate payment of…

A: Calculation of Net Present Value (NPV) Particulars Period Cash Flow(GHS) Present value…

Q: The management of Unter Corporation, an architectural design firm, is considering an investment with…

A: The payback period is the estimated period in which the investment is expected to be returned fully.…

Q: Morrisey Company has two investment opportunities. Both investments cost $6,900 and will provide the…

A: Net present value (NPV): Net present value is defined as the summation of the present value of cash…

Q: Assume a company is going to make an investment of $300,000 in a machine and the following are the…

A: Capital budgeting is used to evaluate the different levels of investment projects. The organization…

Q: Wayne Company is considering a long-term investment project called ZIP. ZIP will require an…

A: CASH PAYBACK PERIOD IS THE AMOUNT OF TIME REQUIRED FOR CASH INFLOW GENERATED BY A PROJECT TO OFFSET…

Q: Rieger International is attempting to evaluate the feasibility of investing $95,000 in a piece of…

A: Payback period, net present value (NPV), and Internal rate of return (IRR) are capital budgeting…

Q: Motel Company is analyzing a capital expenditure that will involved a cash out lay of $208,240.…

A: The internal rate of return method: The internal rate of return method is one of the capital…

Q: Beyer Company is considering the purchase of an asset for $180,000. It is expected to produce the…

A: Net present value: It can be defined as the difference between the PV of the aggregated cash…

Q: Jack Sprat Inc. wants to know if they invest 11,548 in new exercise equipment, plus $2,000 for…

A: Initial investment = 11,548 + 2,000 = 13,548 To calculate the payback period, we need to find the…

Q: Kumi Ltd is considering an investment in a project, which requires an immediate payment of…

A: Formulas:

Q: Alfarsi Industries uses the net present value method to make investment decisions and requires a 15%…

A: Net present value of the investment means difference of present values of cash inflows and cash…

Q: XYZ Inc. is evaluating a project with an initial investment at Time 0 of $925,000. The present value…

A: NPV = PV of cashflows - Initial investment

Q: Fox Co. has identified an investment project with the following cash flows. Year Cash Flow $ 970 760…

A: Present Value Present value refers to the discounted value of cash flows which is occurring at a…

Q: Justine Global Info Tech records the following cash flows at the end of each year a project. If the…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: It is estimated that a certain piece of equipment can save as $25,000 per year in labour and…

A: A cashflow diagram is pictorial representation of cashflows incurred by the enterprise on its…

Q: Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR…

A: Profitability index helps in determining the attractiveness of a project. It is calculated by…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Dalvi Incorporated is considering a new Investment. The table below
lists the cash flows.
Year
Cash Flows
-$25,400
1
$6,300
2
$7,700
3
$11,400
Calculate the Payback period
Calculate the NPV and IRR. Assume that the interest rate is 0%.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1 As per the question

VIEW

Step 2 Solution

VIEW

Step 3 Answer

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Mendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 $770 2 1,030 3 1,290 4 1,400 a. If the discount rate is 10 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 25 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Wells, Inc., has identified an investment project with the following cash flows. Cash Flow $ 950 1,180 1,400 2,140 Year 1 ~34 2 a. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the future value at an interest rate of 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the future value at an interest rate of 24 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Future value at 8 percent b. Future value at 11 percent Future value at 24 percent c.
Mendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,150 2 1,030 3 1,520 4 1,880 If the discount rate is 11 percent, what is the present value of these cash flows? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. What is the present value at 16 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. What is the present value at 22 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Mendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 2 3 $780 1,050 1,310 1,425 a. If the discount rate is 8 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 25 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Present value at 8% b. Present value at 17% c. Present value at 25%
Find the Net Present Value (NPV) for Oman Computer company if the initial investment is 15000 OMR and the cash Inflows are as follows: Year 1 =2509 OMR; Year 2 =5590 OMR; Year 3=7500 OMR and Year 4=9200 OMR. Use discount rate as 2.02%.
Fox Co. has identified an investment project with the following cash flows. Year Cash Flow 1 S 1,090 2 940 3 1, 490 4 1,850 a. If the discount rate is 12 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 15 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) c. What is the present value at 21 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Calculate the EAR of the following investment, entered as a percentage (Example: if your answer is 0.145, enter 14.5) Year Number Cashflow 0 -11400 1 3500 2 3000 3 3100 4 2800 Your Answer:
McCann Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $800 2 1,030 3 1,340 4 1,110 a If the discount rate is 10 percent, what is the present value of these cash flows? b What is the present value at 18 and 28 percent?
Calculate the HPR of the following investment, entered as a percentage (Example: if your answer is 14.5%, enter 14.5 and not 0.145) Period Cashflow 0 -14100 1 3300 2 3300 3 3100 4 2800
*Using Matlab* The current amount A of a principal P invested in a savings account paying an annual interest rate r is given by A = P(1+r/n)^(nt) where n is the number of times per year the interest is compounded. For continuous compounding, A = Pe^(rt). Suppose $10,000 is initially invested at 2.5 percent (r = 0.025). a. Plot A versus t for 0 ≤ t ≤ 20 years for four cases: continuous compounding, annual compounding (n = 1), quarterly compounding (n = 4), and monthly compounding (n = 12). Show all four cases on the same subplot and label each curve. On a second subplot, plot the difference between the amount obtained from continuous compounding and the other three cases. b. Redo part a, but plot A versus t on log-log and semilog plots. Which plot gives a straight line?
Find the PV and FV of an investment that makes the following end-of-year payments. The interest rate is 8%. Year Payment 1 100 2 200 3 400 Rate = 8% To find the PV, use the NPV function: PV = Year Payment x (1 + I )^(N-t) = FV1 100 1.17 116.64 2 200 1.08 216.00 3 400 1.00 400.00 Sum = ?PV = ?FV of PV = ?
Consider the following cash flows and interest rates: 0 r = 2.5% 1 r = 1.5% 5,000 2 r = 1.9% 5,000 3 r = 2.4% 5,000 a. Calculate the present value of these cash flows (at time 0). b. Calculate the future value of these cash flows (at time 4). 4

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS