Let's assume that you are working on an independent capital budgeting project which is expected to have the following cash flows: Year Cash Flows 0 -$850,000 $300,000 $400,000 $500,000 What is the project's net present value (NPV) at an 18% required rate of return? (Round to the nearest whole number.) Will you accept or reject this project? 1 2 3 O-$18,725 (Reject) -$4,174 (Reject) $350,000 (Accept) O $10,801 (Accept)
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- Would you rather have $7,500 today or at the end of 20 years after it has been invested at 15%? Explain your answer. The following are independent situations. For each capital budgeting project, indicate whether management should accept or reject the project and list a brief reason why.Let's assume that you are working on an independent capital budgeting project which is expected to have the following cash flows: Year Cash Flows 0 -$850,000 1 $300,000 2 $400,000 3 $500,000 What is the project’s net present value (NPV) at an 18% required rate of return? (Round to the nearest whole number.) Will you accept or reject this project?Consider the following two mutually exclusive projects: YEAR CASH FLOW (A) CASH FLOW (B)0 -$300,000 -$39,0001 20,000 18,0002 70,000 12,0003 80,000 18,0004 400,000 19,000 Whichever project you choose, if any, you require a 15 percent return on your investment.i) If you apply the payback period (PBP) criterion, which investment will you choose? Why?ii) If you apply the net present value (NPV) criterion, which investment will you choose? Why?iii) If you apply the profitability index (PI) criterion, which investment will you choose? Why?iv) If you apply the internal rate of return (IRR) criterion, which investment will you choose?Why?v) Based on your answers in (i) through (iv), which project will you finally…
- Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$ 54,000 -$ 23,000 1 12,700 11,600 2 23,200 11,200 3 27,600 4 46,500 12,500 6,000 Whichever project you choose, if any, you require a rate of return of 14 percent on your Investment. If you apply the payback criterion, you will choose Project NPV criterion, you will choose Project If you apply the IRR criterion, you will choose Project If you choose the profitability Index criterion, you will choose Project Based on your first four answers, which project will you finally choose? If you apply theConsider the following two mutually exclusive projects:Year Cash Flow (X) Cash Flow (Y)0 -$365,000 -$38,0001 25,000 16,0002 65,000 12,0003 65,000 17,0004 425,000 15,000Whichever project you choose, if any, you require a 13 percent return on your investment. i. Which investment will you choose if you use the payback decision criteria? Justify your answer.ii. Which investment will you choose if you use the NPV decision criteria? Justify your answer.iii. Which project will you choose ultimately based on your answers above?You are considering a project that costs $30 and has expected cash flows of $11.00, $12.10, and $13.31 over the next three years. If the appropriate discount rate for the project's cash flows is 10%, what is the net present value of this project? Select one: a. $19.79 b. $64.10 c. The NPV is negative d. $0.00 e. $0.71
- A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 27,300 1 11,300 2 14,300 3 10,300 What is the NPV for the project if the required return is 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At a required return of 10 percent, should the firm accept this project? multiple choice 1 Yes No What is the NPV for the project if the required return is 26 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At a required return of 26 percent, should the firm accept this project? multiple choice 2 Yes NoConsider the following two mutually exclusive projects: Cash Flow (B) Cash Flow (A) $-300,000 20,000 50,000 50,000 390,000 Year $-40,000 19,000 12,000 18,000 4 10,500 Whichever project you choose, if any, you require 15 percent return on your investment. a) If you apply the payback criterion, which investment will you choose? Why? b) If you apply the NPV criterion, which investment will you choose? Why? c) If you apply the IRR criterion, which investment will you choose? Why? d) If you apply the profitability index, which investment will you choose? Why?A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year 0 1 2 3 NPV Cash Flow What is the NPV for the project if the required return is 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) -$ 27,600 11,600 14,600 10,600 At a required return of 10 percent, should the firm accept this project? NPV O No Yes What is the NPV for the project if the required return is 26 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
- A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow $28,900 12,900 15,900 11,900 2. What is the NPV for the project if the required return is 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPVConsider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 410,000 –$ 68,000 1 66,000 30,000 2 86,000 28,000 3 71,000 25,500 4 446,000 20,600 1) Whichever project you choose, if any, you require a 15% return on your investment. What is the payback period for each project? What is the discounted payback period for each project? What is the NPV for each project? What is the IRR for each project? What is the profitability index for each project? I only have one question left so I would really appreciate it if you could help with all the questions thanks.The cash flows associated with an investment project are as follows: Project Y (200 000) Year 1 100 000 2 100 000 3 120 000 4 110 000 The discount rate is 8 percent. What's the discount payback period of the projects? (compile a spreadsheet) Calculate NPV, PI of a projects Calculate IRR of a projects Should the firm accept the project? a) b) c) d)