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Question 6a A music company is considering creating the world's largest piano. Cost and cash flow details are listed below. The company requires a 12% return on its capital. $2,452,153 a) What is the present value of the yearly cash flows? (round to nearest dollar) Question 6b b) What is the net present value of the project? (round to nearest dollar) ($2,500,000)| (300,000)| (150,000)| Cost of Project Yr 1 cash flow Yr 2 cash flow Yr 3 cash flow Yr 4 cash flow Yr 5 cash flow Yr 6 cash flow Yr 7 cash flow ($47,847) Question 6c 50,000 c) What is the internal rate of return of the project? (round to two decimal places) 250,000 800,000 11.69% 1,200,000 6 points 3,500,000

Question 6a A music company is considering creating the world's largest piano. Cost and cash flow details are listed below. The company requires a 12% return on its capital. $2,452,153 a) What is the present value of the yearly cash flows? (round to nearest dollar) Question 6b b) What is the net present value of the project? (round to nearest dollar) ($2,500,000)| (300,000)| (150,000)| Cost of Project Yr 1 cash flow Yr 2 cash flow Yr 3 cash flow Yr 4 cash flow Yr 5 cash flow Yr 6 cash flow Yr 7 cash flow ($47,847) Question 6c 50,000 c) What is the internal rate of return of the project? (round to two decimal places) 250,000 800,000 11.69% 1,200,000 6 points 3,500,000

EBK CFIN
EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter9: Capital Budgeting Techniques
Section: Chapter Questions
Problem 12PROB
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Question 6a A music company is considering creating the world's largest piano. Cost and cash flow details are listed below. The company requires a 12% return on its capital. $2,452,153 a) What is the present value of the yearly cash flows? (round to nearest dollar) Question 6b b) What is the net present value of the project? (round to nearest dollar) ($2,500,000)| (300,000)| (150,000)| Cost of Project Yr 1 cash flow Yr 2 cash flow Yr 3 cash flow Yr 4 cash flow Yr 5 cash flow Yr 6 cash flow Yr 7 cash flow ($47,847) Question 6c 50,000 c) What is the internal rate of return of the project? (round to two decimal places) 250,000 800,000 11.69% 1,200,000 6 points 3,500,000
Transcribed Image Text:Question 6a A music company is considering creating the world's largest piano. Cost and cash flow details are listed below. The company requires a 12% return on its capital. $2,452,153 a) What is the present value of the yearly cash flows? (round to nearest dollar) Question 6b b) What is the net present value of the project? (round to nearest dollar) ($2,500,000)| (300,000)| (150,000)| Cost of Project Yr 1 cash flow Yr 2 cash flow Yr 3 cash flow Yr 4 cash flow Yr 5 cash flow Yr 6 cash flow Yr 7 cash flow ($47,847) Question 6c 50,000 c) What is the internal rate of return of the project? (round to two decimal places) 250,000 800,000 11.69% 1,200,000 6 points 3,500,000
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