Question

a. Tindall Industries has the opportunity to develop a new plant based hotdog, it estimates that the project’s cost of capital is 10%. The project’s expected cash flows (in $ millions) at the end of year are given below. What is the NPV of this project? Enter your answer in $ millions without the “$”; round your final answer to two decimals.

Timeline | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
---|---|---|---|---|---|---|---|---|

CF | -3,000 | 200 | 250 | 300 | 450 | 700 | 1,000 | 1,000 |

b.

Given the following end of year cash flows (CF), what is the net-present value (NPV) of this investment opportunity. Assume that the project’s cost of capital is 10%. Round your final answer to two decimals.

Timeline | 0 | 1 | 2 | 3 | 4 |
---|---|---|---|---|---|

CF | -1000 | 300 | 400 | 500 | 700 |

c.

Given the following end of year cash flows (CF), what is the Internal Rate of Return (IRR) of this investment opportunity. Enter your answer as a percent; do not include the % sign. Round your final answer to two decimals.

Timeline | 0 | 1 | 2 | 3 | 4 |
---|---|---|---|---|---|

CF | -1000 | 300 | 400 | 500 | 700 |

Answer #1

a. Use NPV function in EXCEL to find the NPV

=NPV(rate,Year1 to Year7cashflows)-Year0 cashflow

=NPV(10%,Year1 to Year7cashflows)-3000=-$566.54

cost of capital | 10% |

Year0 | -3000 |

Year1 | 200 |

Year2 | 250 |

Year3 | 300 |

Year4 | 450 |

Year5 | 700 |

Year6 | 1000 |

Year7 | 1000 |

NPV | -566.54 |

b&c. Use same formula to find the NPV

=NPV(10%,Year1 to Year4cashflows)-1000=$457.07

Use IRR function in EXCEL to find IRR

=IRR(Year0 to Year4 cashflows)=26.87%

cost of capital | 10% |

Year0 | -1000 |

Year1 | 300 |

Year2 | 400 |

Year3 | 500 |

Year4 | 700 |

NPV | 457.07 |

IRR | 26.87% |

2. A project has the following cash flows
C0
C1
C2
C3
($1000)
$300
$400
$600
What is the project’s payback period?
Year
0
1
2
3
Cash Flow
($1000)
$300
$400
$600
Cumulative
($1000)
($700)
($300)
300
a. Calculate the projects NPV at 10%.
b. Calculate the project’s PI at 10%.
c. Calculate an IRR for the project in question 2
How would you answer a,b, and c in excel? I am getting...

You are considering an investment opportunity with the following
costs and benefits. The applicable interest rate for this
investment opportunity is 7.5% (effective annual rate). Calculate
the NPV of this investment opportunity. Round your answer to two
decimals (do not include the $-sign in your answer).
Investment Opportunity Cash Flows in $
Year
0
1
2
3
4
5
6
7
8
Costs
$(14000)
$(10,000)
$(5,000)
$(1,000)
$(1,000)
$ -
$ -
$ -
$ -
Benefits
$ -
$1,000...

Given the following end of year cash flows (CF) estimate the
internal rate of return (IRR) of this project. If the project’s
cost of capital is 10%, would you undertake this project?
Timeline 0 1 2 3 4 CF 0 700 700 700 -3,000
Group of answer choices
No; IRR = 18.93%
Yes; IRR = 18.93%
No; IRR = 7.50%
Yes, IRR is greater than the cost of capital

Problem 2. Consider the
following series of cash flows:
Cumulative
Month
Amount
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
CF (1,000s of $)
$400.00
-700
1200
600
300
-1000
-1200
-400
-300
-1000
1200
400
300
1000
-1200
-400
-300
1000
1200
400
300
-1000
What is the NPV if the MARR yields 15%? Compute
your solution by two (2) methods as follows:
Example.
Compute the...

Project Z has a cost of capital of 15%.
The cash flows are as follows:
Year Cash Flow
0 -1000
1 300
2 300
3 300
4 1000
The Net Present Value is $Answer
Enter you answer as a whole number and two decimals (13.42 or
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500 4 400 The company's WACC is 10 percent. What is the project's
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one: a. Payback = 2.6, IRR = 21.22%, NPV = $300. b. Payback = 2.6,
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$600. d. Payback =...

You are considering an investment opportunity with the following
costs and benefits. The applicable interest rate for this
investment opportunity is 12% (effective annual rate). Calculate
the NPV of this investment opportunity. Round your answer to two
decimals (do not include the $-sign in your answer).
Year
0
1
2
3
4
5
6
Costs
$ (10,000)
$ (5,000)
$ (1,000)
$ (1,000)
$ (1,000)
$ (1,000)
$ (1,000)
Benefits
$ -
$ -
$ 5,000
$ 7,500
$ 7,500...

2. The following cash-flow pattern has two IRRs. Graph the NPV
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(see worksheet for template). Then use the IRR function to
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Year
Cash flow
0
-500
1
600
2
300
3
300
4
200
5
-1,000
6
600
7
700
8
-1500
Discount rate
20%
NPV
Data table
0.00
Year...

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Year
0
1
2
3
4
Cash Flows
-$1,000
$400
$300
?
$200
It takes 2.5 years to recover the
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____
A) $83.5
B) $92.6
C) $105.5
D) $120.0

1.
Beta Enterprises, Inc. is considering a project that has
the following cash flow and WACC data. What is the project's NPV?
Enter your answer rounded to two decimal places. Do not enter $ or
comma in the answer box. For example, if your answer is $12,300.456
then enter as 12300.46 in the answer box.
WACC:
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Year:
0
1
2
3
Cash flows:
-$950
$500
$300
$400
2.
Delta Enterprises, Inc. has a WACC of 10% and is considering...

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