Suppose we are considering a capital investment that costs $686,400 and provides annual operating cash flows of $165,000 for five years and teminal cash flow of $206,000 at the end of the fifth year. The project's opportunity cost of capital is 11%. Calculating the followings: (1) Net present value; (2) Profitability index; (3) Internal rate of retum (try 15% first).
Suppose we are considering a capital investment that costs $686,400 and provides annual operating cash flows of $165,000 for five years and teminal cash flow of $206,000 at the end of the fifth year. The project's opportunity cost of capital is 11%. Calculating the followings: (1) Net present value; (2) Profitability index; (3) Internal rate of retum (try 15% first).
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 1P: A project has an initial cost of 40,000, expected net cash inflows of 9,000 per year for 7 years,...
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