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Describe the net future worth of the project?
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- Has the natural gas revolution in the United States made coal-fired power plants more or less profitable? Why or why not?What process does the net present value method use to help management determine whether a project is acceptable to a company? Options : A. It discounts net cash flows to their present value and then compares that value to the capital outlay required by the project.B. It determines the interest rate that will cause the present value of the capital expenditure to equal the present value of the expected net cash flows.C. It divides the present value of net cash flows by the initial investment to determine the profitability index of the project.D. It identifies the time period required to recover the cost of the capital investment from the net annual cash flow produced by the project.How can the Cash flow be considered to evaluate the economic meritof any investment project?
- What are the benefits of NPW analysis?A pharmaceutical company has spent $500 million to date working on a blood pressure treatment. It has to decide whether to spend another $500 million today to get final approval from the FDA in two years. Once approved, expected profits will be $50 million per year for the foreseeable future. The firm’s cost of capital is 5%. Should the firm proceed? (Hint: use the perpetuity formula used to value projects found in the readings to find the value of the profit stream that starts in two years, and then discount that.) 2. Suppose some doctors do not see any advantage of using the drug over what they currently prescribe for patients and the profit stream is only $25 million per year. Should the firm proceed? 3. Going back to the original information, suppose there is a delay of a year in getting FDA approval. Should the firm proceed? 4. Going back to the original information, suppose the firm’s’ cost of capital is 10%. Should the firm proceed?Considering the following project balances for the proposed investment projects. What is the value of x, y, z?
- Given a project with three paths and their corresponding path lengths: AB-C: 25 days, A-D-E: 15 days, and B-C-E: 20 days; which of the followingstatements is TRUE? A. Activity B has the most slackB. The critical activities are A, B and CC. The earliest project completion time is 15 daysD. The expected duration of the project is 60 dayssuppose that you invest $40,000 in a restaurant business. One year later, you sell half of this business to a partner for $110,000. then, a year later, the business is in the red, and you have to pay $50,000 to close the business. what is the rate of return on your investment from this restaurant business? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.How can we calculate the net future of the project by using the equation?
- Compare Mutually Exclusive Projects?Sunshine Smoothies Company (SSC) manufactures and distributes smoothies. It is considering the "weight loss" smoothies project. The project would require a $4 million investment outlay today The after-tax cash flows would depend on consumers’ demand. There is a 30% chance that demand will be good, and the project will produce after-tax cash flows of $2 million at the end of each year for the next 3 years. There is a 70% chance that demand will be poor, and the project will produce after-tax cash flows of $1 million at the end of each year for the next 3 years. The project is riskier than the firm's other projects, so it has a WACC of 12%. - The firm will know whether the project is success or not after receiving first year's cash flows from normal operating.. - After receiving the first year's cash flows (no matter what receive $1M or $2M in the first year), the firm will have the option to abandon the project. - If the firm decides to abandon the project, the company will no longer…Describe in detail why a project with a Present Worth (PW) equal to or greater than zero is economically justifiable