Project #16410 - Finance Net Present Values

There are Four Net Present Value Problems. Below are the questions, I will also attach the file.

 

For the given cash flows, suppose the firm uses the NPV decision rule.

 

 

 

 

Year

Cash Flow

0

 

–$ 153,000      

1

 

78,000      

2

 

67,000      

3

 

49,000      


 

 

 

Requirement 1:

At a required return of 9 percent, what is the NPV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

 

 

  NPV

  $  

 

 

 

Requirement 2:

At a required return of 21 percent, what is the NPV of the project? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)

 

 

 

  NPV

  $  

 

 

 

 

 

Consider the following cash flows:

 

 

 

Year

Cash Flow

0

 

–$

27,000

 

1

 

 

11,400

 

2

 

 

16,300

 

3

 

 

  9,400

 


 

 

 

Requirement 1:

What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations.)

 

 

 

  Net present value

$  

 

 

 

Requirement 2:

What is the NPV at a discount rate of 10 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

 

 

  Net present value

$  

 

 

 

Requirement 3:

What is the NPV at a discount rate of 20 percent? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)

 

 

 

  Net present value

$  

 

 

 

Requirement 4:

What is the NPV at a discount rate of 30 percent? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)

 

 

 

  Net present value

$  

 

 

 

 

 

An investment has an installed cost of $673,658. The cash flows over the four-year life of the investment are projected to be $228,701, $281,182, $219,209, and $190,376.

 

 

 

Requirement 1:

If the discount rate is zero, what is the NPV? (Do not round intermediate calculations.)

 

 

 

  NPV

$  

 

 

 

Requirement 2:

If the discount rate is infinite, what is the NPV? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.)

 

 

 

  NPV

$  

 

 

 

Requirement 3:

At what discount rate is the NPV just equal to zero? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

 

 

  Discount rate

%  

 

 

 

The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is “looking up.” As a result, the cemetery project will provide a net cash inflow of $109,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 5.1 percent per year forever. The project requires an initial investment of $1,425,000.

 

 

 

Required:

 

 

 

(a)

If Yurdone requires a return of 12 percent on such undertakings, what is the NPV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

 

 

  NPV

$  

 

 

 

(b)

Should the cemetery business be started?

 

  

 

 

 

 

(c)

The company is somewhat unsure about the assumption of a growth rate of 5.1 percent its cash flows. At what constant growth rate would the company just break even if it still required a return of 12 percent on its investment? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimalplaces (e.g., 32.16).)

 

 

 

  Minimum growth rate

%  

 

 

 

Subject Business
Due By (Pacific Time) 11/10/2013 02:00 pm
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