Suppose a project has the following cash flows. What is the NPV if the cost of the project is $105,000 and the required return is 9.75%? Year Cash Flow $28,000 2 32,000 3 36,000 4 39,000
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A: To open the "NPV function" window - MS-Excel --> Formulas --> Financials --> NPV.
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- A project has the following cash flows: Year Cash Flows 0 $ 128,200 12 1 2 3 4 49,400 63,800 51,600 28,100 The required return is 8.7 percent. What is the profitability index for this project? Multiple Choice 1.142 1.003 .803 1.038A project will generate the following cash flows. If the required rate of return is 15%, what is the project’s net present value? Year Cash flow 0 –$50,000 1 $15,000 2 $16,000 3 $17,000 4 $18,000 5 $19,000 Select one: a. $16,790.47 b. $6,057.47 c. $3,460.47 d. $1,487.21 e. –$3,072.47Consider the following cash flows:Year Cash Flow0 -$8,0001 $3,0002 $3,6003 $2,7004 $2,5005 $2,1006 $1,600 1. NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? 2. PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?
- Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$ 15,456 5,225 8,223 13,013 8,705 0 1 234 -$ 276,363 26,400 51,000 57,000 402,000 Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A? Payback period b. What is the payback period for Project B? Payback period c. What is the discounted payback period for Project A? Discounted payback periodYou've estimated the following cash flows (in $) for two projects: A B C 1 Year Project A Project B 2 0 -71 -254 3 1 15 50 4 2 21 73 5 3 29 82 6 4 25.2 113.24 The required return is 7% for both projects. 1. What is the IRR for project A? 2. What is the IRR for project B? 3. What is the NPV of project A? 4. What is the NPV of project B? 5. If the projects are mutually exclusive, which project should you choose? Project B, based on the NPV Project A, based on the IRR Project A, based on the NPV Project B, based on the IRRPOD has a project with the following cash flows: Year Cash Flows 0 -$ 281,000 145,500 123 163,000 128,100 The required return is 8.3 percent. What is the profitability index for this project?
- You've estimated the following cash flows (in $) for a project: A B 1 Year Cash flow 2 0 -3,000 3 1 900 4 2 1,300 5 3 1,606 The required return is 8.5%. 1. What is the IRR for the project? 2. What is the NPV of the project? 3. What should you do? Check all that apply: Accept the project based on its IRR Accept the project based on its NPV Reject the project based on its IRR Reject the project based on its NPVConsider the following two mutually exclusive projects:Year Cash Flow (X) Cash Flow (Y)0 -$365,000 -$38,0001 25,000 16,0002 65,000 12,0003 65,000 17,0004 425,000 15,000Whichever project you choose, if any, you require a 13 percent return on your investment. i. Which investment will you choose if you use the payback decision criteria? Justify your answer.ii. Which investment will you choose if you use the NPV decision criteria? Justify your answer.iii. Which project will you choose ultimately based on your answers above?A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 -$ 27,000 1 23,000 14,000 8,000 a. At a required return of 25 percent, what is the NPV for this project? 2 WN 3 NPV b. At a required return of 34 percent, what is the NPV for this project? NPV
- A firm is evaluating a project with the following cash flows. At a required return of 11 percent, what is the project's NPV? What if the required return is 24 percent? Input area: Required Return Required Return Year 0 Year 1 Year 2 Year 3 Output area: es es es es NPV at 11% NPV at 24% Մ $ $ 11% 24% (Use cells A6 to B11 from the given information to complete this question. You must use the built Excel function to answer this question.) (41,000) 20,000 23,000 14,000Problem 1.a Given the following cash flows for Project M: C0 = -1,000, C1 = +200, C2 = +700, C3 = +698 calculate the IRR for the project. Problem 1.b Project X has the following cash flows: C0 = +2,000, C1 = -1,150, and C2 = -1,150. If the IRR of the project is 9.85% and if the cost of capital is 12%, would you accept or reject? Problem 1.c Story Company is investing in a giant crane. It is expected to cost $6.0 million in initial investment, and it is expected to generate an end-of-year after-tax cash flow of $3.0 million each year for three years. Calculate the NPV at 12%. Would you suggest company to invest? Problem 1.d The real interest rate is 3.0% and the inflation rate is 5.0%. What is the nominal interest rate? Problem 1.e Your firm expects to receive a cash flow in two years of $10,816 in nominal terms. If the real rate of interest is 2% and the inflation rate is 4%, what is the real cash flow for year 2?Consider the following cash flows: Year 0 1 2 3 4 5 6 Cash Flow -$9,000 $2,000 $3,600 $2,700 $2,100 $2,100 $1,600 C. IRR. Calculate the IRR for this project. The company’s required rate of return is 10%. Should it be accepted or rejected? D. NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected? E. PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?