Cash Flow Probability Estimate Assessment $ 4,800 6,300 7,500 (a) 20% 50% 30% $ 5,400 7,200 (b) 30% 50% 8,400 20% $(1,000) 3,000 5,000 (c) 10% 80% 10%
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A: The cash flows can be classified into simple and non-simple by counting the sign (+ or -) changes in…
Q: Year Cash Flow 0 –$ 17,200 1 9,500 2 8,400 3 4,900 a. What is the profitability…
A: profitability index = Present value of cashflow / initial investment
Q: 3) Net Cash Flow -$30,000 +S3,000 +$4,050 +$5,100 +$6,150 +$11,250 +$6,000 +$7,200 +S8,640 EOY 2 3 5…
A: The present worth is the current worth of all cash flow that has to be paid or received in the…
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A: The formula to compute profitability index:
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A: Let CFn = Cashflow in year n r = 12%
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A: IRR is the rate at which NPV = 0
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A: Here,
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A: Present value means current worth of future payments at an interest rate of 14%,
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A:
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A: Formulas:
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A: The question is based on the concept of Financial management.
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Q: Internal Rate of Return (IRR) =?
A: It refers to the rate of return that is computed by the company to make a decision of selection of a…
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A: Net present value is the most commonly used capital budgeting technique that is used for evaluation…
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A: Interest rate is 12% per year To Find: Present Value of Cash flow
Q: Net Cash Flow -$30,000 +$3,000 +$4,050 +$5,100 +$6,150 +$11,250 +$6,000 +S7,200 +$8,640 ΕΟΥ 1 2 3 4…
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A: Solution : Profitability index means Profit to Investment ratio in present worth of return on the…
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- Assuming today is 1st January 2021. Date Cash flows (Rs.) 01-Jan-21 (900,000 ) 31-Dec-21 0 31-Dec-22 240,000 31-Dec-23 320,000 31-Dec-24 490,000 31-Dec-25 250,000 31-Dec-26 345,000 Cost of Capital = 8% Required: Net Present Value (NPV) Payback period (Simple and discounted) Internal Rate of Return (IRR) Solve At Excel.Multiple choice: Assuming that SN North Company has the following net cash inflow: P55,000, P55,000, P55,000, and P55,000 for years 1, 2, 3, and 4, respectively. Assuming further that the company’s cost of capital is 25% for a net cost of investment of P120,000, the net present value (rounded off) is equivalent to: • P15,000• P20,000• P 5,000• P10,000Multiple choice: Assuming that SN North Company has the following net cash inflow: P60,000, P55,000, P50,000, and P45,000 for years 1, 2, 3, and 4, respectively. Assuming further that the company’s cost of capital is 25% for a net cost of investment of P120,000, the net present value, rounded off to the nearest whole number, is equivalent to: • P7,000• P7,300• P7,200• P7,100
- Year Net Cash Flow Discount Factor Present Value (using the factor) Present Value (using Excel formula) 0 $ (3,500,000.00) 1 $ (3,500,000.00) ($3,500,000.00) 1 $ 900,000.00 0.90909 $ 818,181.00 $818,181.82 2 $ 900,000.00 0.82645 $ 743,805.00 $743,801.65 3 $ 900,000.00 0.75131 $ 676,179.00 $676,183.32 4 $ 900,000.00 0.68301 $ 614,709.00 $614,712.11 5 $ 900,000.00 0.62092 $ 558,828.00 $558,829.19 Net Present Value $ (88,298.00) $ (88,291.91) 3. Now assume that inflation is estimated as a 5% increase each year (starting with Year 1) for the entire 5 years. Calculate the new net cash flow values for each year. start with 5% increase for Year 1 net cash flow. Year Net Cash Flow 0 $…Assume a $250,000 investment and the following cash flows for two products: Year Product X Product Y 1 $ 90,000 $ 50,000 2 90,000 80,000 3 60,000 60,000 4 20,000 70,000 a. Calculate the payback for products X and Y. (ind the IRR for the following cash flows assuming a WACC of 10%. YR CF 0 -15,000 1 6,000 2 4,000 3 2,000 4 3,000 5 2,000
- Year Cash inflow (R) 3 45 000 6 90 000 9 115 000 The applicable interest rate is 11,59% per year. The present value of the cash outflows is R95 000 The future value of the cash inflows is approximately [1] R326 950. [2] R271 470. [3] R169 330. [4] R218 000. [5] R250 000Year Cash Flow 0 −$8,200 1 2,500 2 4,100 3 3,900 What is the profitability index for the cash flows if the relevant discount rate is 10 percent? A. 1.079 B. 1.100 C. 0.995 D. 1.016 E. 1.048 What is the profitability index for the cash flows if the relevant discount rate is 16 percent? A. 0.939 B. 0.967 C. 0.986 D. 0.892 E. 0.911 What is the profitability index for the cash flows if the relevant discount rate is 26 percent? A. 0.795 B. 0.819 C. 0.834 D. 0.755 E. 0.771Relevant Cash Flow Data for Year 2:Sales revenues Year 2 $100,000Cost of Goods Sold 20,000Depreciation Expense 10,000Tax Rate 40% Based on the above cash flow data: What is the operating cash flow for year two of this capital budgeting project? A.130,000 B.52,000 C.42,000 D. 78,000
- For the cash flows shown, the correct equation for FW2 using the ROIC method at the reinvestment rate of 20% per year is:a. [10,000(1+ i'' ) + 6000](1.20) - 8000b. [10,000(1.20) + 6000(1+i'' )](1.20) - 8000c. [10,000(1.20) + 6000](1.20) - 8000d. [10,000(1.20) + 6000](1+ i'' ) - 8000$1,200 is received at the beginning of year 1, $2,200 is received at the beginning of year 2, and $3,300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, what will be their combined future value at the end of year 3? Options: 1) $12,520 2) $9,413 3) $8,342 4) $8,735Xander Inc. has prepared the following sensitivity analysis: Line Item Description Amount Amount Amount Estimated Annual Net Cash Flow $500,000 $600,000 $700,000 Present value of annual net cash flows (× 4.487) $2,243,500 $2,692,200 $3,140,900 Present value of residual value 50,000 50,000 50,000 Total present value $2,293,500 $2,742,200 $3,190,900 Amount to be invested (3,000,000) (3,000,000) (3,000,000) Net present value $(706,500) $(257,800) $190,900 In addition, it has assigned the following likelihoods to the three possible annual net cash flows: $500,000, 70%; $600,000, 20%; and $700,000, 10%. Based on an expected value analysis, which of the following statements is accurate? a. The expected value of the annual net cash flow is $540,000, and the project should be accepted. b. The expected value of the annual net cash flow is $660,000, and the project should be accepted. c. The expected value of the annual net cash flow is $660,000, and the project…
