Question

Consider the following project: Period 0 1 2 3 Net cash flow −245 0 93.55 311.10...

Consider the following project:

Period
0 1 2 3
Net cash flow −245 0 93.55 311.10

The internal rate of return is 20%. The NPV, assuming a 20% opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Period
1 2 3
Change in value (economic depreciation)
Expected economic income
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

EXCEL FORMULA:

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
Consider the following project: Period 0 1 2 3 Net cash flow −255 0 94.55 317.20...
Consider the following project: Period 0 1 2 3 Net cash flow −255 0 94.55 317.20 The internal rate of return is 19%. The NPV, assuming a 19% opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
A project has the following cash flows: Year Cash Flow 0 $ 72,500 1 –51,500 2...
A project has the following cash flows: Year Cash Flow 0 $ 72,500 1 –51,500 2 –28,000 What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return             % What is the NPV of this project if the required return is 6 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your...
A project has the following cash flows: Year Cash Flow 0 –$ 16,600 1 7,300 2...
A project has the following cash flows: Year Cash Flow 0 –$ 16,600 1 7,300 2 8,600 3 7,100 What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) What is the NPV at a discount rate of 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What is the NPV at a discount rate...
A project has the following cash flows: Year Cash Flow 0 –$ 15,400 1 6,100 2...
A project has the following cash flows: Year Cash Flow 0 –$ 15,400 1 6,100 2 7,400 3 5,900 What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) NPV $ 4,000 What is the NPV at a discount rate of 8 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ 1,276.06 What is...
Consider the following cash flows: Year Cash Flow 0 –$ 34,000   1 15,100   2 16,600   3...
Consider the following cash flows: Year Cash Flow 0 –$ 34,000   1 15,100   2 16,600   3 12,500   a. What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What is the NPV at a discount rate of 8 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the NPV at a discount...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$40,000...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$40,000       –$180,000       1 25,000       15,000       2 22,000       45,000       3 20,000       50,000       4 15,000       275,000       The required return on these investments is 11 percent. Required: (a) What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Payback period   Project A years     Project B years  ...
Consider an asset with the following cash flows: Year 0 Year 1 Year 2 Year 3...
Consider an asset with the following cash flows: Year 0 Year 1 Year 2 Year 3 Cash flows ($ millions) −72 31.20 28.80 26.40 The firm uses straight-line depreciation. Thus, for this project, it writes off $24 million per year in years 1, 2, and 3. The discount rate is 10%. Complete the following table. Does the economic depreciation equal the book depreciation? Is the book rate of return the same in each year? Is the project's book profitability its...
($ thousands) Period 0 1 2 3 4 5 6 7 Net cash flow –12,900 –1,514...
($ thousands) Period 0 1 2 3 4 5 6 7 Net cash flow –12,900 –1,514 2,977 6,353 10,564 10,015 5,787 3,299 Present value at 21% –12,900 –1,251 2,033 3,586 4,928 3,861 1,844 869 Net present value = 2,970 (sum of PVs)     Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 21% nominal rate and 9% expected inflation. NPV should be unchanged at +2,970, or $2,970,000. (Negative...
QUESTION 1 Year Cash flow 0 -1075 1 350 2 450 3 375 4 300 A...
QUESTION 1 Year Cash flow 0 -1075 1 350 2 450 3 375 4 300 A firm is evaluating a potential capital expenditure project. The project will last for 4 years and has the above expected cash flows. The firm has a WACC of 15%. What is the project's NPV? If NPV is negative, enter the number with a minus sign. Use 2 decimal places Year Cash flow 0 -1075 1 350 2 450 3 375 4 300 The firm...
A project has the following cash flows: Year Cash Flow 0 $ 68,500 1 –44,500 2...
A project has the following cash flows: Year Cash Flow 0 $ 68,500 1 –44,500 2 –31,200 what is the net present value of this project if the required rate of return is 4 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT