Question

A project requires an initial investment of $2,200 and grants cash flows of $1,300 at the end of year 1, $ 950 at the end of year 2, $ 1,900 at the end of year 3 and $ 850 at the end of year 4. At a discount rate of 32%, calculate NPV and IRR. What decision should be made by the company?

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Answer #1

An investment project has the following cash flows: initial cost
= $1,000,000; cash inflows = $200,000 per year for eight years. If
the required rate of return is 12%: i) Compute the project’s NPV.
What decision should be made using NPV? ii) Compute the project’s
IRR. How would the IRR decision rule be used for this project, and
what decision would be reached?

A capital investment project requires an initial investment of
$100 and generates positive cash flows, $50 and $100, at the end of
the first and second years, respectively. (There is no cash flow
after the second year) The firm uses a hurdle rate of 15% for
projects of similar risk.
Determine whether you should accept or reject the project based
on NPV.
Determine whether you should accept or reject the project based
on IRR.
Determine whether you should accept or...

An investment project has the following cash flows: Initial
investment of $1,000,000 and cash flows starting in the first year
through year 4 of $300,000 each. If the required rate of return is
12% What is the present value for each cash flow? What is the NPV
and what decision should be made using the NPV?

Your company received an investment proposal which requires an
initial investment of $5439783 now. The project will last for 5
years. You also have the following information about this
project;
Years
1
2
3
4
5
CF
Last 6 digits of your student ID
120,000
130,000
140,000
543978
Discount Rate
5%
7%
8%
10%
10%
If you receive the above cash flows at the end of each year,
calculate the NPV using both spreadsheet method and excel NPV
function, and...

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 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 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 project requires an initial investment of $100,000 and is
expected to produce a cash inflow before tax of $27,200 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.
(Do not...

A project requires an initial investment of $1.2 million. It
expects to generate a perpetual cash flow. The first year cash flow
is expected at $100,000. The cash flows are then expected to grow
at 1.25% forever. The appropriate cost of capital for this project
is 11%. What is the project's IRR and should it be accepted based
on the IRR rule?
Group of answer choices
IRR is 11.6%; project should be accepted
IRR is 11.6%; project should not be...

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...

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