Question

A project needs an initial outlay of $3000 for equipment and will net a cash flow of $450 for the next 10 years. At the end of the 10th year, there is a Salvage Value of $1000 for the equipment. What is the NPV of the project if the cost of capital is 12% p.a. effective (to the nearest dollar)?

Select one:

a. -$953

b. $2500

c. -$135

d. $1585

Answer #1

**Option C (-$135) is the answer.**

*Note:*

1. The present value factors in the third column are calculated
using the formula 1/(1+0.12)^{n} where n is the number of
year.

2. The present values have been obtained by multiplying the cash
flows with the *present value factors.*

3. The NPV has been obtained by adding all the present values in the last column.

4. For year 10, salvage value of $1000 is also added to the $450

A project needs an initial outlay of $3000 for equipment and
will net a cash flow of $250 for the next 15 years. At the end of
the 15th year, there is a Salvage Value of $1000 for the equipment.
What is the NPV of the project if the cost of capital is 15% p.a.
effective (to the nearest dollar)? Select one
a. -$1415 b. -$945 c. $2250 d. $1585

PADICO is considering an investment project. The
project requires an initial $5 million outlay for equipment and
machinery. Sales are projected to be $2.5 million per year for the
next four years. The equipment will be fully depreciated
straight-line by the end of year 4. The cost of goods sold and
operating expenses (not including depreciation) are predicted to be
30% of sales. The equipment can be sold for $500,000 at the end of
year 4.Padico also needs to add...

PADICO is considering an investment project. The
project requires an initial $5 million outlay for equipment and
machinery. Sales are projected to be $2.5 million per year for the
next four years. The equipment will be fully depreciated
straight-line by the end of year 4. The cost of goods sold and
operating expenses (not including depreciation) are predicted to be
30% of sales. The equipment can be sold for $500,000 at the end of
year 4.Padico also needs to add...

PADICO is considering an investment project. The project
requires an initial $5 million outlay for equipment and machinery.
Sales are projected to be $2.5 million per year for the next four
years. The equipment will be fully depreciated straight-line by the
end of year 4. The cost of goods sold and operating expenses (not
including depreciation) are predicted to be 30% of sales. The
equipment can be sold for $500,000 at the end of year 4.Padico also
needs to add...

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.

the benefit-cost ratio for a project with an initial outlay of
$9000 and net cash flows of %5000 p.a. for the next three years and
a required rate of return of %10 p.a. is:
A. $3434.
B. 0.3815
C. 1.21
D.1.3815

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 project has an initial requirement of $177685 for new
equipment and $9227 for net working capital. The installation costs
are expected to be $12515. The fixed assets will be depreciated to
a zero book value over the 4-year life of the project and have an
estimated salvage value of $135789. All of the net working capital
will be recouped at the end of the project. The annual operating
cash flow is $98459 and the cost of capital is 7%...

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...

A project will produce an operating cash flow of $283,000 a year
for four years. The initial cash outlay for equipment will be
$631,000. An aftertax salvage value of $42,000 for the equipment
will be received at the end of the project. The project requires
$56,000 of net working capital that will be fully recovered. What
is the net present value of the project if the required rate of
return is 16 percent?
$166,218.32
$159,009.65
$151,870.15
$143,218.96
$137,642.18

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 7 minutes ago

asked 8 minutes ago

asked 10 minutes ago

asked 14 minutes ago

asked 16 minutes ago

asked 16 minutes ago

asked 19 minutes ago

asked 22 minutes ago

asked 33 minutes ago

asked 36 minutes ago

asked 36 minutes ago

asked 36 minutes ago