Question

East Coast Television is considering a project with an initial outlay of $X (you will have to determine this amount). It is expected that the project will produce a positive cash flow of $55,000 a year at the end of each year for the next 14 years. The appropriate discount rate for this project is 11 percent. If the project has an internal rate of return of 14 percent, what is the project's net present value?

**1. If the project has an internal rate of return of
14%, then the project's initial outlay is $:**

**2. If the discount rate is 11%, then the NPV is
$:**

Answer #1

If we calculate NPV or present value of all cash inflows at IRR, then the answer will be equal to initial outflow, as the IRR = PV of cash inflows = Cash outflow

Calc:

Q 13
Jigger Ltd is considering undertaking project X, which will
involve an initial outlay of £600k. The project has the following
cash inflows associated with it:
Project X
Year 1
£100,000
Year 2
£200,000
Year 3
£300,000
Year 4
£400,000
What is the NPV of project X if a 12% discount rate is used?
a)
A negative NPV of £118,000
b)
A positive NPV of £718,000
c)
A positive NPV of £200,000
d)
A positive NPV of £118,000

(Net present value calculation) Big Steve's, makers of
swizzle sticks, is considering the purchase of a new plastic
stamping machine. This investment requires an initial outlay of
$95,000 and will generate net cash inflows of $19,000 per year
for 11 years.
a. What is the project's NPV using a discount rate of 9
percent? Should the project be accepted? Why or why not?
b. What is the project's NPV using a discount rate of 13
percent? Should the project be...

Project X and Project Y are two mutually exclusive projects.
Project X requires an initial outlay of $38,000 and generates a net
cash flow of $14,000 per year for six years. Project Y requires an
initial outlay of $52,000, and will generate cash flows of $15,300
per year for eight years. Which project should be chosen and why?
(Assume that the discount rate for both projects is 10
percent).
A. Project X because Project X has
a larger NPV than Project...

(Payback
period, NPV, PI, and IRR
calculations)
You are considering a project with an initial cash outlay of
$75,000
and expected free cash flows of
$26,000
at the end of each year for
5
years. The required rate of return for this project is
7
percent.
a. What is the project's payback period?
b. What is the project's
NPV?
c. What is the project's
PI?
d. What is the project's
IRR?

AL-sahwa Inc. is considering a project with the following cash
flows: Initial outlay = OMR 24,000. Cash flows for Year 1 = 50% of
the Initial outlay; Year 2 = 60% of the Initial outlay and Year 3 =
35% of the Initial outlay. Calculate the net present value of the
project, If the appropriate discount rate is 16%. Select one:
a. OMR 4534
b. OMR 7466
c. OMR (7466)
d. OMR 2428

6c1
A project has an initial outlay of $2,154. It has a single cash
flow at the end of year 8 of $4,834. What is the internal rate of
return (IRR) for the project?
Round the answer to two decimal places in percentage
form. (Write the percentage sign in the
"units" box)
6b1
Find the net present value (NPV) for the following series of
future cash flows, assuming the company’s cost of capital is 14.71
percent. The initial outlay is...

A company is considering a project that requires an initial
outlay of 1,500 SEK. The project will produce a first cash-flow of
400 SEK at the end of year 1 and then the subsequent yearly
cash-flows will grow at a rate of 2% per year. The project has a
lifespan of 6 years. Suppose that you know that the EAR rate is
equal to 4%.
What is the EAA of this project?

The Aubergine Corporation is considering investing in a project
that requires an initial outlay of $400,000 and has a profitability
index of 1.5. It is expected to generate equal annual cash flows
over the next 12 years. The required return for this project is
20%. The NPV of this project is:

(A)
A company is considering a major expansion of its product line. The
initial outlay would be $10,100,000 and the project would generate
cash flows of $1,290,000 per year for 20 years. The appropriate
discount rate is 10%. (a) calculate the NPV (b) calculate the PI
(c) calculate the IRR (d) should this project be excepted?
(B) The same company is considering a new system for its lot.
The system will provide annual labor savings and reduced waste
totaling $175,000...

A company is considering a 6-year project that requires an
initial outlay of $18,000. The project engineer has estimated that
the operating cash flows will be $4,000 in year 1, $7,000 in year
2, $7,000 in year 3, $7,000 in year 4, $7,000 in year 5, and $7,000
in year 6. At the end of the project, the equipment will be fully
depreciated, classified as 5-year property under MACRS. The project
engineer believes the equipment can be sold for $5,000...

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