Question

A capital project requires an initial capacity of outlay of 2,000,000 and will return the following...

A capital project requires an initial capacity of outlay of 2,000,000 and will return the following amounts (paid at the end of the 5 years) 600,000, 500,000, 250,000, 150,000, 75,000 solve for each, assume that cost of the capital 10% per year, solve for a) payback b) net present value c)internal rate of return d)present value index please explain profitable or not or any other key elements

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

As PI < 1 and NPV <0 and IRR< 0, the project is not profitable.

Formulae

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 company invests in a new project that requires an initial capital outlay of $835087. The...
A company invests in a new project that requires an initial capital outlay of $835087. The project will generate annual net cash flows of $196478 over a period of 9 years. The after-tax cost of capital is 10%. In addition, a working capital outlay of $55156 will be required. This working capital outlay will be recovered at the end of the project’s life. What is the net present value of the project? Select one: a. $264670 b. $296434 c. $933215...
Calculate the internal rate of return of a project which requires an initial outlay of 18000...
Calculate the internal rate of return of a project which requires an initial outlay of 18000 and produces a return of 7000 at the end of year 1 and 14000 at the end of year 2.
A proposed project requires an initial cash outlay of $388,699 for equipment and an additional cash...
A proposed project requires an initial cash outlay of $388,699 for equipment and an additional cash outlay of $51,864 in year 1 to cover operating costs. During years 2 through 4, the project will generate cash inflows of $500,000 a year. What is the net present value of this project at a discount rate of 9 percent? Round your answer to the nearest whole dollar.
A firm is considering the two mutually exclusive investments projects. Project Alpha requires an initial outlay...
A firm is considering the two mutually exclusive investments projects. Project Alpha requires an initial outlay of $600 and will return $160 per year for the next seven years; Project Beta requires an initial outlay of $1,100 and will return $350 per year for the next five years. Assuming a 11% required return, calculate the NPV, Payback Period, and MIRR of each project. Please help by showing Excel calculations. Thanks!
The Aubergine Corporation is considering investing in a project that requires an initial outlay of $400,000...
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:
 East Coast Television is considering a project with an initial outlay of​ $X (you will have...
 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 ​$43000 a year at the end of each year for the next 14 years. The appropriate discount rate for this project is 7 percent. If the project has an internal rate of return of 9 ​percent, what is the​ project's net present​ value? a.  If the project...
A firm is considering a replacement project which requires the initial outlay of $300,000 which includes...
A firm is considering a replacement project which requires the initial outlay of $300,000 which includes both an after-tax salvage from the old asset of $12,000 and an additional working capital investment of $8,000. The 12-year project is expected to generate annual incremental cash flows of $54,000 and have an expected terminal value at the end of the project of $20,000. The cost of capital is 15 percent, and its marginal tax rate is 40 percent. Calculate the net present...
East Coast Television is considering a project with an initial outlay of​ $X (you will have...
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...
NPV: Basic Concepts Buena Vision Clinic is considering an investment that requires an outlay of $600,000...
NPV: Basic Concepts Buena Vision Clinic is considering an investment that requires an outlay of $600,000 and promises a net cash inflow one year from now of $810,000. Assume the cost of capital is 10 percent. The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems. Required: 1. Break the $810,000 future cash inflow into the three components shown below. Enter all your answers as positive amounts. a. The return of...
Capital Budgeting Analysis : A firm is planning a new project that is projected to yield...
Capital Budgeting Analysis : A firm is planning a new project that is projected to yield cash flows of - $595,000 in Year 1, $586,000 per year in Years 2 through 5, and $578,000 in Years 6 through 11. This investment will cost the company $2,580,000 today (initial outlay). We assume that the firm's cost of capital is 11%. (1) Draw a timeline to show the cash flows of the project. (2) Compute the project’s payback period, net present value...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT