Question

A project has an initial cost of $6,000 and has annual cash inflows of $1,725, $2,165,...

A project has an initial cost of $6,000 and has annual cash inflows of $1,725, $2,165, $2,281, and $2,624 in years 1-4. Assuming a 15% discount rate, find the following for the project.
1.NPV
2.IRR
3.Profitability index
Should we accept the project based on each of these rules?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Since NPV is postive we should accept it

IRR is higher than discount rate so we should accept

The PI is higher than 1 so we should accept it

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 has an initial cost of $6,000 and has annual cash inflows of $1,725, $2,165,...
A project has an initial cost of $6,000 and has annual cash inflows of $1,725, $2,165, $2,281, and $2,624 in years 1-4. Assuming a 15% discount rate, find the following for the project. 1. Payback period 2. Discounted payback period
An investment project has annual cash inflows of $5,400, $6,000, $7,300, and $8,600, and a discount...
An investment project has annual cash inflows of $5,400, $6,000, $7,300, and $8,600, and a discount rate of 10 percent. What is the discounted payback period for these cash flows if the initial cost is $9,000? options: 2.02 years 2.51 years 1.66 years 1.83 years 1.95 years A project that provides annual cash flows of $16,000 for 9 years costs $85,824 today. Assuming a discount rate of 13%, What is the NPV of this project? options: -3,850.33 1,872.49 2,825.92 4,291.68)...
When the present value of the cash inflows exceeds the initial cost of a project, then...
When the present value of the cash inflows exceeds the initial cost of a project, then the project should be Group of answer choices accepted because the internal rate of return is positive accepted because the profitability index is less than 1. accepted because the profitability index is negative. accepted because IRR is higher than the discount rate. rejected because the net present value is negative
A project has an initial cost of $94,000, a life of 9 years, and equal annual...
A project has an initial cost of $94,000, a life of 9 years, and equal annual cash inflows. The required return is 9.6 percent. According to the profitability index decision rule, what is the minimum annual cash flow necessary to accept the project?
A project has an initial cost of $95,500, a life of 6 years, and equal annual...
A project has an initial cost of $95,500, a life of 6 years, and equal annual cash inflows. The required return is 8.6 percent. According to the profitability index decision rule, what is the minimum annual cash flow necessary to accept the project?
A project has an initial cost of $95,200, a life of 9 years, and equal annual...
A project has an initial cost of $95,200, a life of 9 years, and equal annual cash inflows. The required return is 8.5 percent. According to the profitability index decision rule, what is the minimum annual cash flow necessary to accept the project?
An investment project has the following cash flows: initial cost = $1,000,000; cash inflows = $200,000...
An investment project has the following cash flows: initial cost = $1,000,000; cash inflows = $200,000 per year for eight years. If the required rate of return is 12%: i) Compute the project’s NPV. What decision should be made using NPV? ii) Compute the project’s IRR. How would the IRR decision rule be used for this project, and what decision would be reached?
A proposed project has an initial cost of $38,000 and cash inflows of $12,300, $24,200, and...
A proposed project has an initial cost of $38,000 and cash inflows of $12,300, $24,200, and $16,100 for Years 1 through 3, respectively. The required rate of return is 16.8 percent. Based on IRR, should this project be accepted? Why or why not?
A project has an initial cost of $10,000 and cash inflows of $2,000, $4,000, $6,000, and...
A project has an initial cost of $10,000 and cash inflows of $2,000, $4,000, $6,000, and $2,000 a year over the next four years, respectively. What is the payback period?
Stone Inc. is evaluating a project with an initial cost of $11,500. Cash inflows are expected...
Stone Inc. is evaluating a project with an initial cost of $11,500. Cash inflows are expected to be $1,500, $1,500 and $13,000 in the three years over which the project will produce cash flows. If the discount rate is 11%, what is the payback, net present value and profitability index of the project?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT