A project that will cost $120,000 is estimated to generate cash flows of $25,000 per year for eight years. What is the net present value of the project, assuming a 10% required rate of return? (Use the present value tables in this chapter.) A. $11,675 B. $13,375 C. $75,000 D. $95,000
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- The current period statement of cash flows includes the following: Cash balance at the beginning of the period $493,337 Net cash flow from operating activities 185,916 Net cash flow used for investing activities 56,134 Net cash flow used for financing activities 85,148 The cash balance at the end of the period is a. $537,971 b. $352,055 c. $820,535 d. $594,105A labor saving device system save $2,000 per year for five (5) years. It can be installed at a cost of $8,000. The rate of return on this planned investment is most nearly: a. = 12.36% b. = 9.36% c. 10% d. i = 8%Question: Your client is asking you to design a Flux Capacitor. The Flux Capacitor is expected to cost $5,200 to build. If operations and maintenance costs are anticipated to be 15% of the build costs the first year of operation and operation and maintenance costs will increase by 6% each year after, how much will your client have invested in the Flux Capacitor after 5 years? Notes from instructor: I have had a few questions about the Econ. Assignment. I want to clarify that the 6% interest rate does not accumulate over 4 years and it is not added to the 15%. If something increases by the interest it is (1+i) each year. I recommend finding the cost of each year and then summing them up. The equation is not direct from the FE manual so this is going to best your best course of action for now.
- What is the i*% for the given project? (Round answers to the third number after the decimal) Cash Flow 0 ($7,000) 1 $3,600 2 $2,900 3 $0 4 $1,300 5 $500(c) If A and B are mutually exclusive projects, which project would you select based on the rate of return on incremental investment at MARR = 10%? The rate of return on the incremental investment is %. (Round to one decimal place.) Which project would you select based on the rate of return on incremental investment at MARR = 10%? Choose the correct answer below. Project A O Project B 1: More Info FOT23 n 0 1 Net Cash Flow Project A - $145,000 35,000 35,000 140,000 Project B - $130,000 25,000 25,000 150,000A 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?
- The following cash flows result from a potential construction project for your company: 1. Receipts of $565,000 at the start of the contract and $1,200,000 at the end of the fourth year 2. Expenditures at the end of the first year of $400,000 and at the end of the second year of $900,000 3. A net cash flow of $0 at the end of the third year. A Using an appropriate rate of return method (Approximate ERR), for a MARR of 20%, should your company accept this project (Perform all calculations using 5 significant figures and round your answer to one decimal place. Also remember that text answers are case-sensitive):? Answers entered using text are case sensitive! What is the approximate ERR for this project? Number 5 Should your company undertake this project? (Enter either 'Yes' or 'No'): 198 团Economics If you invest $10,000 now into a project that will yield net revenues of $1,327 at the end of each year for 12 years, what is the internal rate of return (IRR) of your investment? Oa. 8% Ob. 18%A company is considering purchasing equipment costing $70,000. The equipment is expected to reduce costs from year 1 to 3 by $7,000, year 4 to 8 by $10,000, and in year 9 by $6,000. In year 9, the equipment can be sold at a salvage value of $15,000. Calculate the internal rate of return (IRR) for this proposal. ..... The internal rate of return is %. %6. (Round to the nearest tenth as needed.)
- The following graph has plots of the net PW of an investment as functions of %-ge changes in the values of the input variables V1, V2, V3, V4 and V5. V1 V2 V3 50% NGƯỜ V5 -30% -20% $200,000 $150,000 $100,000 $50,000 -10% -$50,000 - -$100,000 -$150,000 0% Present Worth B. Decrease of $25,000 C. Increase of 22% D. No change can affect economic feasibility E. Decrease of 22% 10% To which two variables is the present worth most sensitive to? A. V1 and V2 B. V3 and V4 C. V4 and V5 D. V1 and V5 OE. V2 and V3 % change 20% 30% 40% 50% What is the maximum allowable change in V2 before the investment becomes un-economical? OA. Increase of $25,000The following cash flows result from a potential construction project for your company: 1. Receipts of $505,000 at the start of the contract and $1,200,000 at the end of the fourth year 2. Expenditures at the end of the first year of $400,000 and at the end of the second year of $900,000 3. A net cash flow of $0 at the end of the third year. Using an appropriate rate of return method (Approximate ERR), for a MARR of 20%, should your company accept this project (Perform all calculations using 5 significant figures and round your answer to one decimal place. Also remember that text answers are case-sensitive):? Answers entered using text are case sensitive! What is the approximate ERR for this project? Number Should your company undertake this project? (Enter either 'Yes' or 'No'): %A study by the New York Federal Reserve Bank concludes that an engineering bachelor’s degree generates approximately a 15% return on investment over the course of a decade. Suppose the typical engineering student spends $15,000 per year for four years on his/her education. What extra annual return (in dollars) does the typical student realize during the 10 years following graduation? State your assumptions.