Question

Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require the same initial investment. Compute the present value of the cash inflows for each investment using a 14% discount rate. (PLEASE ROUND EACH DISCOUNTED CASH FLOW TO THE NEAREST DOLLAR) Year Investment X Investment Y 1 $4,500 6,000 2 5,000 5,500 3 5,500 5,000 4 6,000 4,5,00 Total $21,000 $21,000

1. (Total: 10 marks; 5 marks for X and Y each)

Answer #1

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Annual cash inflows from two competing
investment opportunities are given below. Each investment
opportunity will require the same initial investment. Compute the
present value of the cash inflows for each investment using a 14%
discount rate. (PLEASE ROUND EACH DISCOUNTED CASH FLOW TO THE
NEAREST DOLLAR)
Year
Investment X
Investment Y
1
$4,500
6,000
2
5,000
5,500
3
5,500
5,000
4
6,000
4,5,00
Total
$21,000
$21,000
(Total: 10 marks; 5 marks for X and Y
each)

Annual cash inflows from two competing
investment opportunities are given below. Each investment
opportunity will require the same initial investment. Compute the
present value of the cash inflows for each investment using a 16%
discount rate. (PLEASE ROUND EACH DISCOUNTED CASH FLOW TO THE
NEAREST DOLLAR)
Year
Investment X
Investment Y
1
$5,500
7,000
2
6,000
6,500
3
6,500
6,000
4
7,000
5,500
Total
$25,000
$25,000

Annual cash inflows that will arise from two competing
investment projects are given below:
Year
Investment
A
Investment
B
1
$ 4,000
$7,000
2
5,000
6,000
3
6,000
5,000
4
7,000
4,000
Total
$22,000
$22,000
The discount rate is 12%.
Required:
Compute the present value of the cash inflows for each
investment. Each investment opportunity will require the same
initial investment. (Use Microsoft Excel to calculate
present values. Do not round intermediate
calculations.)
Investment A:
Item
RATE...

Calculating Discounted Payback- An investment project has annual
cash inflows of $5,000, $5,500, $6,000, and $7,000, and a discount
rate of 11 percent. What is the discounted payback period for these
cash flows if the initial cost is $8,000? What if the initial cost
is $12,000? What if it is $16,000?

An investment project has annual cash inflows of $3,200, $4,100,
$5,300, and $4,500, and a discount rate of 14 percent. What is the
discounted payback period for these cash flows if the initial cost
is $5,900?

An investment project has annual cash inflows of $4,953, $3,527,
$4,866, and $3,966 for the next four years, respectively, and a
discount rate of 15%.
What is the discounted payback if the initial investment is
$5,500?

An investment project has annual cash inflows of $5,000, $3,300,
$4,500, and $3,700, for the next four years, respectively. The
discount rate is 14 percent.
1.What is the discounted payback period for these cash flows if
the initial cost is $5,100? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Discounted payback
period
years
2.What is the discounted payback period for these cash flows if
the initial cost is $7,200? (Do...

An investment project has annual cash inflows of $5,100, $3,200,
$4,400, and $3,600, for the next four years, respectively. The
discount rate is 15 percent.
a. What is the discounted payback period for these cash flows if
the initial cost is $5,000?
b. What is the discounted payback period for these cash flows if
the initial cost is $7,100?
c. What is the discounted payback period for these cash flows if
the initial cost is $10,100?

Two mutually exclusive investment opportunities require an
initial investment of $100,000 and generate the following cash
flows. At what cost of capital would an investor regard both
opportunities as being equivalent?
Project A
Project B
Time 0
-100,000
-100,000
Time 1
50,000
40,000
Time 2
45,000
30,000
Time 3
30,000
60,000
14%
18%
20%
24%

Two mutually exclusive investment opportunities require an
initial investment of $100,000 and generate the following cash
flows. At what cost of capital would an investor regard both
opportunities as being equivalent?
Project A
Project B
Time 0
-100,000
-100,000
Time 1
50,000
40,000
Time 2
45,000
30,000
Time 3
30,000
60,000
14%
18%
20%
24%

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