Question

2. company has been presented with the following investment opportunity. The initial investment is expected to...

2. company has been presented with the following investment opportunity. The initial investment is expected to be $380,000. The operating cash flows are expected to be $120,000 in year 1, $120,000 in year 2, $120,000 in year 3, $80,000 in year 4, $80,000 in year 5 and $50,000 in year 6. If your cost of capital is 14%, what is the NPV and IRR for the project? Should they accept?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The Colby Corporation has been presented with an investment opportunity, which will yield end-of-year cash flows...
The Colby Corporation has been presented with an investment opportunity, which will yield end-of-year cash flows of $10,000 per year in Years 1 through 3, $15,000 per year in Years 4 through 8, and $20,000 in Years 9 & 10. This investment will cost the firm $50,000 today, and the firm's cost of capital is 9 percent. What is the NPV for this investment? Please show work. Thank you.
A company has the following investment opportunity: Time Cash Flow 0 -$1,200,000 1 600,000 2 400,000...
A company has the following investment opportunity: Time Cash Flow 0 -$1,200,000 1 600,000 2 400,000 3 250,000 4 150,000 5 150,000 The weighted average cost of capital for this company is 12%. a. What is the net present value of this project? Based on NPV analysis, should the company accept the project? Why or why not? b. What is the internal rate of return? Based on IRR analysis, should the company accept the project? Why or why not?
Grey company is analyzing a project that requires an initial investment of $600,000. The project's expected...
Grey company is analyzing a project that requires an initial investment of $600,000. The project's expected cash flows are: (Year 1) $350,000, (Year 2) -$125,000, (Year 3) $500,000 and (Year 4) $400,000. 1. Grey company's WACC is 10%, and the project has the same risk as the firm's average project. Calculate this project's modified internal rate of return (MIRR): _______%. 2. If Grey company's managers select projects based on the MIRR criterion, they should accept or reject this independent project....
A company is considering the following investment opportunities: Project A Initial cost = $5,500,000 Expected life...
A company is considering the following investment opportunities: Project A Initial cost = $5,500,000 Expected life = 10 yrs NPV = $340,000 IRR = 20% Project B Initial cost = $3,000,000 Expected life = 10 yrs NPV = $300,000 IRR = 30% Project C Initial cost = $2,000,000 Expected life = 10 yrs NPV = $200,000 IRR = 40% If the company has a WACC of 15% and the company is using capital rationing with a fixed capital budget of...
The Seattle Corporation has been presented with an investment opportunity that will yield end-of-year cash flows...
The Seattle Corporation has been presented with an investment opportunity that will yield end-of-year cash flows of $29,685 per year in Years 1 through 4, $41,703 per year in Years 5 through 9, and $33,862 in Year 10. This investment will cost the firm $181,265 today, and the firm’s cost of capital is 11.3 percent.  What is the NPV for this investment?
A company is considering a project with the following cash flows: Initial Investment = -$200,000 Cash...
A company is considering a project with the following cash flows: Initial Investment = -$200,000 Cash Flows: Year 1 = $140,000                      Year 4 = $80,000                      Year 5 = $120,000 If the appropriate discount rate is 12%, what is the NPV of this project?
A company is considering a project with the following cash flows: Initial Investment = -$200,000 Cash...
A company is considering a project with the following cash flows: Initial Investment = -$200,000 Cash Flows: Year 1 = $140,000 Year 4 = $80,000 Year 5 = $120,000 If the appropriate discount rate is 12%, what is the NPV of this project?
A project requires an initial investment of $100,000 and is expected to produce a cash inflow...
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $26,900 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 10%. Ignore inflation. a. Calculate project NPV for each company. b. What...
A firm expects cash flows from an initial investment of 1 000 000$. The expected cash...
A firm expects cash flows from an initial investment of 1 000 000$. The expected cash flows are as follows: 1.year: 600 000$ , 2.year: 400 000$, 3.year: 350 000$, 4.year: 300 000$ If the cost of capital is 16%, what is approximate IRR of this investment project? Do you accept this investment project?
A project requires an initial investment of $100,000 and is expected to produce a cash inflow...
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $27,500 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 10%. Ignore inflation. 1. Calculate project NPV for each company. (Do not...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT