Suppose you want to open a restaurant. The initial cost will be $3,500,000 and you require a return of 20%. You expect cash flows to be $625,000 in perpetuity. Q1: What is the NPV? The expectation of $625,000 came from the following. You project cash flows to be either $800,000 or $450,000 in perpetuity. Both outcomes have a 50% probability of occurring. Q2: Compute the NPV of the optimistic and pessimistic forecast. Q3: Based on what we know, should you accept or reject the project?
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- You are thinking about purchasing an investment from Get-Rich-Quick Investmemnt company. If you buy the investment, you will receive $50 every month for five(5)years. Payment will be made at the end of each month. If your required rate of return is 9% how much should you be willing to pay for this investment? Group of answer choices $4,632.87 $2,735.25 $2,525.10 $2,408.67Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?You have the opportunity to invest in a project with the following cash flows. Initial investment/Outlay today: $11,000. Cashflow back to you in 1 year $6000 Cashflow back to you in 2 years $5000 Scrap Value in 2 years $500 Assume interest rates are 5% in the 1 year and 7% in the 2 year. (tip: use the spreadsheet “NPV” from Moodle to helpin your calculations) a. Calculate the NPV of the project (show formula/workings)? b. Should you invest in this project? Why ?
- Investment X offers to pay you $5,300 per year for eight years, whereas Investment Y offers to pay you $7,300 per year for five years. Which of these cash flow streams has a higher present value if the discount rate is 5% ? If the discount rate is 15% ? (Solve this using excel formula and provide formulas, also solve this using a financial calcuator solution. Show your work please)You would like to invest in the following Project: Year Cash Flow 0 $-55,000 1 30,000 2 37,000 Your boss insists that only projects that return $1.10 in today's dollars for every $1 invested can be accepted. The discount rate is 10%. Based on this criteria, should you accept the Project? Why?Suppose you have a financial investment opportunity for which if you invest $2,000 today, you will receive $100 per year for 3 years plus $2,500 in the third year. Is this worthwhile in financial terms if the interest rate on the best alternative use of the funds is 10% How would I plug this into a finacial calculator? usin N, I/Y, PV, PMT,FV
- Imagine you are investing $100,000 into a project A. MARR is 15% This investment will bring you the following positive cash flows: Year 1: $31,000 Year 2: $31,000 Year 3: $31,000 Year 4: $31,000 Year 5: $31,000 a.Find the future worth of the investment b.You found another mutually exclusive alternative B that requires you to invest an additional $20,000 compared to investment A. It will bring $36,500 of net annual income for 5 years. Is this alternative better than the original one? Use incremental analysis to evaluate them. c.What are the IRRs of alternative A and alternative B?Imagine you are investing $100,000 into a project A. MARR is 15% This investment will bring you the following positive cash flows: Year 1: $31,000 Year 2: $31,000 Year 3: $31,000 Year 4: $31,000 Year 5: $31,000 a.Find the future worth of the investment b.You found another mutually exclusive alternative B that requires you to invest an additional $20,000 compared to investment A. It will bring $36,500 of net annual income for 5 years. Is this alternative better than the original one? Use incremental analysis to evaluate them. c.What are the IRRs of alternative A and alternative B? Please calculate with formula.You identify an investment project with the following cash flows. If the discount rate is 10%, what is the present value of these cash flows? Y1- $500 Y2- $550 Y3- $800 Y4- $450. Please type answer no write by hend.
- MIA Q.1) Your company expects to earn at least 18 percent on its investments. You have to choose between two similar projects (A&B). Below is the cash information for each project. Which of the two projects would you fund if the decision is based only on financial information by using net present value model? if you use payback model which project you will choose? show your calculations? Year 0 1 2 Outflow 225000 190000 0 0 Inflow C.f DE P.V Year Outflow Inflow c. f = R-C C. F D. F P.V 3 30000 0 150000 220000 -225000-190000 150000 10000 - (1+k)" 0 300000 0 5 7 30000 0 30000- 215000 205000 197000 100000 215000 175000 197000 70000 0.847 0.718 3.669 0.516 0.437 0.37 0.314 -225000-160930 107700 115710 110 94076475 72890 219743 7: Project A 4 0 1 2 100000 0 P.V of of WPV = 5PV Project B 3 4 50000 0 50000 150000 250000 250000 200000 250000 -50000 150000 300000 1 0-8470-718 0.609 0.516 -3.000.0042356107700 اسمان M 6 0 wp-v-11975 11976 15 7 50000 30000 200000 180000 120000 150000 180000 90000…1.Calculate the NPV of the following project using a discount rate of 12 %. Yr 0 = -$500; Yearr1 = -$50; Yr2 = $50; Yearr3 = $200; Yearr4 = $400; Yearr5 = $400a.$118.75b. $208.04c. $ 61.22d.$ 618.752.You are buying your first house for $220,000, and are paying $30,000 as a down payment. You have arranged to finance the remaining $190,000 30-year mortgage with a 7% nominal interest rate and monthly payments. What are the equal monthly payments you must make?a. $1,976b. $1,110c. $1,264d. $1,5133.How much would $1,599 due in 9 years be worth today if the discount rate were 10.5%?a. $3,955.20b. $3,770.35c. $3,927.43d. $4,000.004. Apple company sales last year were $48,000, and its total assets were $25,500. What was its total assets turnover ratio?a. 1.10b. 1.99c. 1.21d. 1.885. you purchase 100 shares at a price of $RM45 per share. One year later, the share are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of the period. Determine the total return…You decide to open a new restaurant. The initial cost ( investment) is 750 000 TL. The forecasted cash flows that you expect to gain from this restaurant are 150 000 TL every year for 9 years. If the discount rate is %28, calculate the net present value (NPV), and is this a feasible project?