Question

How would you would use the present value, future value, and net present value to evaluate...

How would you would use the present value, future value, and net present value to evaluate an investment proposal if you should invest $1,000,000 to open another location for your retail business.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

First, I will compute the present value of the future of cash flows that will occur from this investment of $1,000,000. After, I will calculate the summation of these PVs that I have computed above. Then I compute net present value:

NPV = Summation of Present value of future cash flows - INtial Investment

Finally, I will see whether the final NPV is positive or negative. If it is positive, it means that the investment proposal is profitable and if it is negative, it means that investing the retail business is not a good idea.

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
1. Please explain the concept of Present Value and Future Value. Why would you think these...
1. Please explain the concept of Present Value and Future Value. Why would you think these calculations are important? 2. What is the Net Present Value of an investment? Why is this important to understand? Why Use Net Present Value?
How would you go about estimating the Net Present Value (NPV) of a college education by...
How would you go about estimating the Net Present Value (NPV) of a college education by estimating the future earning with and without a college education. Please show an example. What is the relationship between Net Present Value (NPV) and Profitability Index (PI)?
What is the net present value decision rule? How does it relate to future value and...
What is the net present value decision rule? How does it relate to future value and net present value?
In this assignment you will be working with a dollar value of $1,000,000 to calculate present...
In this assignment you will be working with a dollar value of $1,000,000 to calculate present value, present value of an annuity, future value and future value of an annuity. In each of the four parts of the assignment, you will provide a scenario in which you personally or a business would need to calculate these values. Personal examples are planning for retirement, planning for education or winning the lottery. Business examples are buying a new delivery truck, bond issues,...
Describe how to use the net present value or present discounted value computation formula to determine...
Describe how to use the net present value or present discounted value computation formula to determine whether to invest in a 4-year college degree, given a high school diploma. Show how the costs of a college degree have two major components.
Net Present Value Analysis Champion Company is considering a contract that would require an expansion of...
Net Present Value Analysis Champion Company is considering a contract that would require an expansion of its food processing capabilities. The contract covers five years. To provide the required products, Champion would have to purchase additional equipment for $88,000. Champion estimates the contract will provide annual net cash inflows (before taxes) of $38,000. For tax purposes, the equipment will be depreciated as follows: Year 1 $11,000 Year 2 22,000 Year 3 22,000 Year 4 22,000 Year 5 11,000 Although salvage...
Net Present Value Analysis Champion Company is considering a contract that would require an expansion of...
Net Present Value Analysis Champion Company is considering a contract that would require an expansion of its food processing capabilities. The contract covers five years. To provide the required products, Champion would have to purchase additional equipment for $80,000. Champion estimates the contract will provide annual net cash inflows (before taxes) of $35,000. For tax purposes, the equipment will be depreciated as follows: Year 1 $10,000 Year 2 20,000 Year 3 20,000 Year 4 20,000 Year 5 10,000 Although salvage...
Question #4 – Net Present Value: Financial function that you will need: NPV: Calculates the net...
Question #4 – Net Present Value: Financial function that you will need: NPV: Calculates the net present value of an investment by using a discount rate and a series of future payments (negative values) and income (positive values). NPV(rate,value1,value2, ...) Rate – discount rate for one period Value 1, etc. – cash amounts at the end of each period. Q4. (a) How much would you invest today to receive $7,500 at the end of each year for the first five...
United Bankshores, Inc. wishes to evaluate three capital investment proposals by using the net present value...
United Bankshores, Inc. wishes to evaluate three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows: Branch Office Expansion Computer System Upgrade Install Internet Bill-Pay Amount to be invested $532,596 $353,235 $210,792 Annual net cash flows: Year 1 311,000 208,000 146,000 Year 2 289,000 187,000 101,000 Year 3 264,000 166,000 73,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870...
United Bankshores, Inc. wishes to evaluate three capital investment proposals by using the net present value...
United Bankshores, Inc. wishes to evaluate three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows: Branch Office Expansion Computer System Upgrade Install Internet Bill-Pay Amount to be invested $1,111,121 $656,453 $354,891 Annual net cash flows: Year 1 425,000 315,000 183,000 Year 2 395,000 284,000 126,000 Year 3 361,000 252,000 92,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT