Question

A firm is considering a four year capital project which is expected to have net cash inflows of $20,000, $15,000, $13,000 and $10,000 respectively in the four years following the start of the project. The cost of the project is $35,000 while the firm's weighted average cost of capital is 20%. What is the net present value of the project?

a |
$15,500 |

b |
-$5,300 |

c |
$4,417 |

d |
$23,000 |

B.

If the firm is considers a five year capital project which is expected to have cash inflows of $50,000 per year. The estimated annual cash outflows of the project are expected to be 25% of the annual cash inflows. The cost of the project is $110,000 while the firm's weighted average cost of capital is 20%. What is the net present value of the project?

a |
-$72,625 |

b |
$39,500 |

c |
$77,500 |

d |
$2,125 |

Answer #1

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0.35
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a
project has an initial cost of $36,875 expected net cash inflows of
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1. The cash inflows and (outflows) associated with a project are
as follows:
Year
Expected net cash flow ($)
0
120000
1
40000
2
50000
3
60000
The payback period for this project would be:
a. 2 years
b. 3 years
c. 2 years and 6 months
d. 2 years and 3 months

A firm has projected free cash flows of $575,000 for Year 1,
$625,000 for Year 2, and 750,000 for Year 3. The projected terminal
value at the end of Year 3 is $8,000,000. The firm's Weighted
Average cost of Capital (WACC) is 12.5%.
Please post the answer in an Excel Document
Determine the Discounted Cash Flow (DCF) value of the
firm.
Recommend acceptance of this project using net present value
criteria.
Display your calculations.

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risk index of 1.5. The net present value of the project when
adjusting for risk is ________. "
"($30,000)"
"$105,000 "
"$87,000 "
"($9,500)"

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