Question

A firm evaluates all of its projects by using the NPV decision rule Year Cash Flow...


A firm evaluates all of its projects by using the NPV decision rule

Year Cash Flow

0 -31,000
1 23,000
2 13,000
3 11,000

At a required return of 17 percent, what is the NPV for this project?

  • 5,023
  • $5,274
  • $4,822
  • $5,123
  • $4,922

b. At a required return of 34 percent, what is the NPV for this project?

  • $-2,125.40
  • $-1,943.23
  • $-2,064.68
  • $-1,983.71
  • $-2,024.20
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=23000/1.17+13000/1.17^2+11000/1.17^3

=36022.87

NPV=Present value of inflows-Present value of outflows

=36022.87-31000

=$5023(Approx)

b.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=23000/1.34+13000/1.34^2+11000/1.34^3

=28975.80

NPV=Present value of inflows-Present value of outflows

=28975.80-31000

=$-2024.2(Approx)(Negative)

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 firm evaluates all of its projects by using the NPV decision rule. Year                 Cash Flow...
A firm evaluates all of its projects by using the NPV decision rule. Year                 Cash Flow 0 –$25,000       1 22,000       2 13,000       3 8,000          Required: (a) At a required return of 23 percent, what is the NPV for this project?    (b) At a required return of 41 percent, what is the NPV for this project?
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash...
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash Flow 0 –$31,000       1 21,000       2 12,000       3 5,000          a. At a required return of 15 percent, what is the NPV for this project? b. At a required return of 40 percent, what is the NPV for this project?
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash...
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash Flow 0 –$31,000       1 20,000       2 15,000       3 8,000          a. At a required return of 12 percent, what is the NPV for this project?    b. At a required return of 32 percent, what is the NPV for this project?
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash...
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash Flow 0 –$28,000       1 19,000       2 13,000       3 9,000          a. At a required return of 14 percent, what is the NPV for this project?    b. At a required return of 39 percent, what is the NPV for this project?
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash...
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash Flow 0 –$29,000       1 20,000       2 14,000       3 10,000          a. At a required return of 19 percent, what is the NPV for this project?    b. At a required return of 34 percent, what is the NPV for this project?
A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow...
A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 –$27,000 1 20,000 2 13,000 3 8,000 a. At a required return of 13 percent, what is the NPV for this project? b. At a required return of 33 percent, what is the NPV for this project? A project that provides annual cash flows of $10,600 for 8 years costs $56,550 today.    a. If the required return is 7 percent, what is...
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash...
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash Flow 0 –$29,000       1 22,000       2 17,000       3 7,000          a. At a required return of 23 percent, what is the NPV for this project? b. At a required return of 33 percent, what is the NPV for this project?
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash...
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash Flow 0 –$29,000       1 20,000       2 16,000       3 5,000          a. At a required return of 25 percent, what is the NPV for this project? b. At a required return of 41 percent, what is the NPV for this project?
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash...
A firm evaluates all of its projects by using the NPV decision rule.    Year                 Cash Flow 0 –$27,000       1 20,000       2 16,000       3 7,000          Required: (a) At a required return of 21 percent, what is the NPV for this project? (Click to select)4,232.12 4,320.29 4,628.88 ,408.464 4496.63    (b) At a required return of 34 percent, what is the NPV for this project? (Click to select) -259.78 -267.42 -244.5 -254.69 -249.6
A firm evaluates all of its projects by using the NPV decision rule. Year (Cash Flow)...
A firm evaluates all of its projects by using the NPV decision rule. Year (Cash Flow) Y0 (–$27,000) Y1 (22,000) Y2 (14,000) Y3 (8,000) a. At a required return of 26 percent, what is the NPV for this project? b. At a required return of 32 percent, what is the NPV for this project?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT