Question

What is the equivalent annual annuity for a 4-yr project with the following cash flows and a discount rate of 9%?

Year | Cash Flow |

0 | (175,000) |

1 | 45,000 |

2 | 55,000 |

3 | 65,000 |

4 | 85,000 |

What is the payback period for a project with the following cash flows:

Year | Cash Flow |

0 | (175,000) |

1 | 45,000 |

2 | 55,000 |

3 | 65,000 |

4 | 85,000 |

What is the net present value for a project with the following cash flows and a discount rate of 9%?

Year | Cash Flow |

0 | (175,000) |

1 | 45,000 |

2 | 55,000 |

3 | 65,000 |

4 | 85,000 |

Answer #1

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

=45000/1.09+55000/1.09^2+65000/1.09^3+85000/1.09^4

=$197984.8724

**NPV**=Present value of inflows-Present value of
outflows

=$197984.8724-$175000

=**$22984.87(Approx)**

**Equivalent annual
annuity=[**(rate*NPV)]/[1-(1+rate)^-time period]

=[($22984.87*0.09)]/[1-(1.09)^-4]

=(2068.63852/0.291574788)

=**7094.71(Approx)**

Year | Cash flows | Cumulative cash flows |

0 | (175000) | (175000) |

1 | 45000 | (130000) |

2 | 55000 | (75000) |

3 | 65000 | (10000) |

4 | 85000 | 75000 |

**Payback period**=Last period with a negative
cumulative cash flow+(Absolute value of cumulative cash flows at
that period/Cash flow after that period).

=3+(10000/85000)=**3.12 years(Approx).**

(Discounted payback period) Sheinhardt Wig Company is
considering a project that has the following cash flows: If the
project's appropriate discount rate is 9 percent, what is the
project's discounted payback period? The project's discounted
payback period is nothing years. (Round to two decimal
places.)
YEAR PROJECT CASH FLOW
0 -60,000
1 20,000
2 50,000
3 65,000
4 55,000
5 40,000

Question 4 (Total marks =15)
You are evaluating an investment project, Project XX, with the
following cash flows:
Period Cash Flow
0 -$200,000
1 $65,000
2 $65,000
3 $65,000
4 $65,000
5 -$65,000
Calculate the following:
(a). Payback period ( 2 marks)
(b). Calculate the discounted cash flows for each year, assuming a
10% discount rate.
(c) Discounted payback period, assuming a 10% cost of capital.
(d) .Net present value, assuming a 10% cost of capital.
(e). Profitability index, assuming...

Find the equivalent present value at year 0 of the following
cash flows:
An annuity with an annual amount of $200, starting from end of
year 3 to end of year 8, plus
A lump sum cash flow of $1000 at the end of year 6.
Use an annual rate of 8%

Gio's Restaurants is considering a project with the following
expected cash? flows:
Year
Project Cash Flow? (millions)
0
?$(210?)
1
100
2
72
3
100
4
90
If the? project's
appropriate discount rate is
11percent, what is
the? project's discounted payback? period?
The? project's discounted payback period is ____
years? Round to 2 decimal places

What is the net present value of a project with the following
cash flows if the discount rate is 10 percent?
Year
0
1
2
3
4
Cash Flow -$32,000
$9,000 $10,000
$15,200 $7,800
A. $1,085.25
B. $1,193.77
C. $3,498.28
D. $4,102.86
E. $4,513.15

A firm wants to start a project. A team of financial analysts
estimated the following cash flows
year
cash flow
0 -$100,000
1 55,000
2 43,000
3 45,000
Suppose that the discount rate (interest rate) is 12%. The NPV
is

What is the net present value of a project with the following
cash flows if the discount rate is 11 percent?
Year 0: $16500
Year 1: $1400
Year 2: $1500
Year 3: $1750
Year 4: $0

Consider a project with the following cash flows:
Year 0: Cash flow = $500
Year 1: Cash flow = $0
Year 2: Cash flow = -$500
If the current market rate of interest is 8% per year,
compounded annually, what is the value of this stream of cash flows
expressed in terms of dollars at year 1? (Note: This
does not ask for the value as of year 0, but rather, as of year
1.)
a. $0
b. $250
c. $133...

There is a project with the following cash flows : Year Cash
Flow
year Cash Flow
0 −$23,050
1 6,700
2 7,800
3 6,950
4 7,550
5 6,300
What is the payback period?

1.
Z Enterprises is considering a project that has the following cash
flow data. what is the payback period?
year 0: -1000 year 1: 500. yr 2: 500 yr 3: 500
2. Z Enterprises is considering a project that has the
following cash flow data. what is the payback period? what is the
npv? (cost of capital is 11%)
year 0: -1000
yr 1: 500
yr 2: 300
yr 3: 800

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