Question

Your business will cost $6409 to start and is expected to make $64 by the end...

Your business will cost $6409 to start and is expected to make $64 by the end of this year and grow each year by $6, your costs are expected to be constant at $26 per year. What is the NPV of the project if it is expected to last 33years and have MARR of 9%?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

In this case, series of revenue is an annuity with uniform arithmetic gradient.

Where G=$6

NPV of project=-6409+64*(P/A,0.09,33)+6*(P/G,0.09,33)-26*(P/A,0.09,33)

NPV of project=-6409+38(P/A,0.09,33)+6*(P/G,0.09,33)

Let us calculate the interest factors

So,

NPV of project=-6409+38*10.46444060+6*94.93143526=-$5441.76

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A project your firm is considering for implementation has these estimated costs and revenues: an investment...
A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $1,000 for each of the next 4 years, and then remain constant for the following 5 years; savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm’s...
You want to buy a business. Have you estimated that you will start to make profits...
You want to buy a business. Have you estimated that you will start to make profits from the second year and up to year 4 estimated at $ 25,000. You have also estimated that your earnings will grow from that year and until year 10 and that you will generate $ 60,000 at the end every year. • Assume an opportunity cost in your investment of a 7% computed annually. Find the Value of that investment today.
A business is expected to pay a dividend of $1.50 per share at the end of...
A business is expected to pay a dividend of $1.50 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5% per year in the future. The company's beta is 1.50, the market return is 15%, and the risk-free rate is 1.50%. What is the current stock price?
You are 26 years old and decide to start saving for your retirement. You plan to...
You are 26 years old and decide to start saving for your retirement. You plan to save $6,000 at the end of each year (so the first deposit will be one year from now), and will make the last deposit when you retire at age 65. Suppose you earn 6% per year on your retirement savings, how much will you have saved for retirement right at age 65? (Round to the nearest dollar.)
Incredible Gadgets, LLC is investing in new equipment to upgrade their business. The cost of this...
Incredible Gadgets, LLC is investing in new equipment to upgrade their business. The cost of this equipment is $75,000 with costs of $10,000 for installation and start-up. The product that they will make with this has material costs of $3/unit and labor costs of $5/unit with expected annual production of 10,000 units. Overhead is 50% of labor costs and maintenance costs are $2500 per year with an expected increase of $250 per year during the life of the equipment. The...
9. A new business opportunity has presented itself. The business venture is expected to last for...
9. A new business opportunity has presented itself. The business venture is expected to last for ten years. For the first four years, negative cash flows of $30,000 per year are expected at the end of each year. No net cash flow is expected at the end of year five. A positive cash flow of $35,000 is anticipated at the end of year six. A positive cash flow of $45,000 is expected at the end of years seven through ten....
1. You wish to start a small side business, competitors in this industry have the following...
1. You wish to start a small side business, competitors in this industry have the following costs of capital: Firm 1: re=15% rd=5% d/e=.5 Firm 2: re=18% rd = 5.2% d/e=.68 A. What will be a good estimate of your unlevered cost of capital for your new business? B. If your firm will have cashflows of 3 million next year and it will grow by 2% per year what is the unlevered value of your firm? (online fill in 1)...
You plan to open your own wine business. The cost of plant, property and equipment is...
You plan to open your own wine business. The cost of plant, property and equipment is $500,000. You already have the money for the initial cost which you could invest at the same level of risk and expect to earn 10%. You think you can sell 1 million bottles/year at $1/per bottle. Your costs are $200,000/per year to keep the factory running plus $0.50/bottle produced. Your tax rate is 50% and you plan to operate this business for 5-years. You...
An expansion project being considered by your firm has an initial cost of $8,000,000 and expected...
An expansion project being considered by your firm has an initial cost of $8,000,000 and expected net cash flows of $1,500,000 per year for the first 2 years, 1,800,000 for the third and fourth years, and $1,900,000 per year for the fifth and sixth years. All cash flows will occur at the end of each year. Assume that the project will be terminatedat the end of the sixth year. Your firm’s cost of capital is 11%. Calculate the Net Present...
1. A project has an initial cost of $63,275, expected net cash inflows of $15,000 per...
1. A project has an initial cost of $63,275, expected net cash inflows of $15,000 per year for 9 years, and a cost of capital of 8%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent. 2. A project has an initial cost of $63,275, expected net cash inflows of $15,000 per year for 9 years, and a cost of capital of 8%. What...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT