Compute the NPV for Project X with the cash flows shown as follows if the appropriate cost of capital is 9 percent.Time:123.4Cash flow:-1,000-751001002,000Multiple Choice$486.29-$639.96$392.44$360.04< Prev5 of 18Next >MacBook Air

NPV can be calculated by following function in excel =NPV(rate,value1,[value2],…) + Initial…

Answered: Compute the NPV for Project X with the…

Compute the NPV for Project X with the cash flows shown as follows if the appropriate cost of capital is 9 percent. Time: 3 4 Cash flow: -1,000 -75 100 100 2,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EB: Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two,...

See similar textbooks

Related questions

Q: Compute the PI statistic for Project Q if the appropriate cost of capital is 13 percent. (Do not…

A: Calculation of Profitability Index (PI):The profitability index (PI) is 1.01.Excel Spreadsheet:

Q: A project cost $1.3 million and will generate cash flows in perpetuity of $230,000. The firm's cost…

A: Given information in question: - Project cost= $1300000 Perpetuity=$230000 Cost of capital=14%

Q: Fusion Energy is evaluating a project that has the following annual free cash flows: Period Free…

A: The internal rate of return refers to a metric used in capital budgeting for measuring…

Q: Project A costs $1,000, and its cash flows are the same in Years 1 through 10. Its IRRis 16%, and…

A: INITIAL INVESTMENT = 1000 IRR= 16% WACC = 8%

Q: Compute the NPV statistic for Project X given the following cash flows if the appropriate cost of…

A: Capital budgeting is the technique used for analyzing the investment in long term projects. Net…

Q: Using the method of your choice calculate the Net Present Value of the following cash flows. Assume…

A: Net present value is the difference between the present value of cash inflow and present value of…

Q: Compute the NPV statistic for Project X given the following cash flows if the appropriate cost of…

A: NPV is calculated as present value of cash flows less initial investment

Q: Consider two investment projects with the following cash flow transactions: Compute the rate of…

A: YEAR PROJECT 1 PROJECT 2 0 -3000.00 -2000.00 1 0.00 1300.00 2 0.00 1500.00 3 0.00…

Q: Refer to two projects with the following cash flows: Year Project A -$100 40 40 40 40 Project B…

A: To Find: Profitability Index

Q: Refer to two projects with the following cash flows: Project A -$100 Project B -$100 Year 1 40 50 40…

Q: An investment project has an initial cost of $260 and cash flows $75, $105, $100, and $50 for years…

A: First step in the computation of discounted Payback period is the computation of present values of…

Q: A firm evaluates all of its projects by applying the IRR rule. The required return for the following…

A: IRR refers to internal rate of return. it is used to evaluate the attractiveness of a project.

Q: Compute the NPV for Project X with the cash flows shown below if the appropriate cost of capital is…

A: Net Present value of a project is the sum of all the cash inflows and outflows.

Q: The capitalized cost (CC) of the given project whose Cash Flow diagram is given below is closest to:…

A: Capitalized cost: The capitalized cost is used to obtain a fairly accurate estimate of the cost of…

Q: A project has the following cash flows. What is the maximum number of Internal Rates of Return that…

A: Internal Rate of Return (IRR) is the rate at which net present value of the project becomes zero.…

Q: Consider the two investments with the following sequences of cash flows. At Marr of 15%. What is the…

A: IRR refers to the annualized rate of return for a given project. Higher the IRR, better the…

Q: (Compute both NPV and IRR). The cost of capital is 10%.

A: Net Present Value: It is a measure of profitability applied in capital budgeting to determine the…

Q: Compute the PI statistic for Project Q if the appropriate cost of capital is 12 percent. (Do not…

A: Calculation of Profitability Index (PI):The profitability index (PI) is 0.85.Excel Spreadsheet:

Q: Compute the MIRR statistic for Project I if the appropriate cost of capital is 12 percent. (Do not…

A: Cost of capital = 12% Time Cash flow 0 -11000 1 5330 2 4180 3 1520 4 2000

Q: ompute the MIRR for Project Y and accept or reject the project with the cash flows shown as follows…

A: MIRR is modified internal rate of return in this reinvestment of the fund is considered that is why…

Q: Use the information in the table below for the following 5 a A capital investment project is…

A: Profitability Index =Sum of present value / Initial Investment

Q: Suppose we have a project with the following cash flows: Outgoing: P150,000 at t = 0, P250,000 at t…

A: IRR may be calculated using the following excel formula

Q: Compute the NPV statistic for Project U given the following cash flows if the appropriate cost of…

A: The present value of a given cash flow: The present value of a given cash flow, at a specified rate…

Q: Compute the NPV statistic for Project Y given the following cash flows if the appropriate cost of…

A: Cost of Capital is 10% To Find: NPV

Q: Judson's cost of capital is 12%, what is the project's NPV? Year Cash Flow in $ 0 ($1000) 1…

A: Net Present Value (NPV) is the sum of the present value of all the cash inflows and outflows.Please…

Q: Compute the IRR statistic for Project F. The appropriate cost of capital is 11 percent. (Do not…

A: Calculation of IRR:The IRR is 3.38%.Excel Spreadsheet:

Q: Example IRR Using Discount Factor of 10% and 12%, calculate the IRR for a project where RM10,000 is…

A: The question is related to Capital Budgeting and is of Internal Rate of Return. The IRR is the rate…

Q: Compute the IRR statistic for Project E. The appropriate cost of capital is 8 percent. (Do not round…

A: IRR refers to the Internal rate of return. It is the rate of return of a project at which the net…

Q: Compute the PI statistic for Project Q if the appropriate cost of capital is 12 percent. (Do not…

A: Profitability Index: The profitability index (PI) is a metric used to assess the desirability of a…

Q: Consider the cash flows for the following investment projects: (a) For Project A. find the value of…

A: The question is based on the concept of Capital Budgeting, where the present value of cash inflows…

Q: Compute the IRR statistic for Project F. The appropriate cost of capital is 13 percent. (Do not…

A: IRR is the required rate of return for the project to have zero Net Present value. IRR can be…

Q: Compute the NPV for Project X and accept or reject the project with the cash flows shown below if…

A: Calculation of NPV:The NPV is $30.76.Since the NPV of the project is positive, this project can be…

Q: Compute the NPV statistic for Project U if the appropriate cost of capital is 10 percent. (Do not…

A: Time Cash flow 0 -1000 1 350 2 1480 3 -520 4 300 5 -100 Cost of capital = 10%

Q: A project has the cash flows shown in the following table. If the cost of capital is 11%, what is…

A: NPV is the difference between present value of cash inflows and initial investment NPV =Present…

Q: You are analyzing two proposed capital investments with the following cash flows: Year Project X…

A: Here, Year Project X Project Y 0 - $20,000 - $20,000 1 12,630 7,470 2…

Q: Compute the NPV for Project X and accept or reject the project with the cash flows shown below if…

A: A method of capital budgeting that helps to evaluate the present worth of cash flow and a series of…

Q: You are analyzing two proposed capital investments with the following cash flows: Year Project X…

A: Formulas:

Q: 2. You are evaluating an investment project with the following cash flows : Period Cash Flows - $200…

A: The following calculations are done to evaluate the profitability of the project.

Q: Calculate the present value of a project using the information below Cash flow (S) -15,000.00…

A: NPV is the difference the present value of cash inflow and present value of cash outflow over periof…

Q: Referring to the table below, calculate the Net Present Value (NPV) and Profitability Index (PI).…

A: Net present value is the sum of all the discounted cash flows during the tenure of the investment.…

Q: Cash of $12,000 will be received in year 6. Assuming an opportunity cost of capital of 7.2%, which…

A: Future value is the amount of to be received or paid in future by taking into account the…

Q: 2.- A project has a total cost of $8,700. The cash flows are $1,000 at first year, $2,000 in the…

A: Internal rate of return is an discount rate at which the Net present value of project will becomes…

Q: What is the MIRR for the project using a 12% Cost of Capital? Show in a timeline format. Year…

A: Modified Internal Rate of Return (MIRR) is a new form of Internal rate of return (IRR). It also…

Q: Consider the cash flows for the following investment projects. Assume that MARR=12%/year. C A в 0…

A: The Annual Worth (AW) method: The annual worth method gives the value of equivalent annual cash…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

100%

Compute the NPV for Project X with the cash flows shown as follows if the appropriate cost of capital is 9 percent.
Time:
1
2
3.
4
Cash flow:
-1,000
-75
100
100
2,000
Multiple Choice
$486.29
-$639.96
$392.44
$360.04
< Prev
5 of 18
Next >
MacBook Air

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two, $2,500 in year three, $3,000 in year four and $2,000 in year five. What is the NPV using 8% as the discount rate?
Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site. Gardial Fisheries is considering two mutually exclusive investments. The projects expected net cash flows are as follows: a. If each projects cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? b. Construct NPV profiles for Projects A and B. c. What is each projects IRR? d. What is the crossover rate, and what is its significance? e. What is each projects MIRR at a cost of capital of 12%? At r = 18%? (Hint: Consider Period 7 as the end of Project Bs life.) f. What is the regular payback period for these two projects? g. At a cost of capital of 12%, what is the discounted payback period for these two projects? h. What is the profitability index for each project if the cost of capital is 12%?
Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C.
Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?
Assume a company is going to make an investment in a machine of $825,000 and the following are the cash flows that two different products would bring. Which of the two options would you choose based on the payback method?