Enter 0 if the project never pays back. Learn its importance and uses. Multiple Choice Questions on Capital Budgeting - Finance - BrainMass 1.20 Initial Investment = 100,000Present value of future cash flows = 120,000Profitability index = ? Question 1 What if the initial cost is $4,300? A project has an initial investment of $125,000 and cash flows of What if it is $6. The discount rate is 10%. To calculate NPV, you need to estimate the timing and amount of future cash flows and pick a discount rate equal to the minimum acceptable rate of return. Firms often calculate a project's break-even sales using book earnings. What if the initial cost is $4,450? How to choose the discount rate in NPV analysis? The time value of money is represented in the NPV formula by the discount rate, which might be a hurdle rate for a project based on a companys cost of capital. It has a single payoff at the end of year 4 of $200,000. Jason Fernando is a professional investor and writer who enjoys tackling and communicating complex business and financial problems. Fixed costs are $2 million a year. Initial Investment: $80,000 Projected life: 8 years Net cash flows each year: $15,000, An investment project costs $10,000 and has annual cash flows of $2,800 for six years. A project requires an initial investment of $290,000. A project requires an initial investment in equipment of $90,000 and then requires an investment in working capital of $10,000 at the beginning (t = 0). A project has an initial cash outflow of $1,110 and cash inflows of $315 per year for 4 years. What is the internal rate of return (IRR) for the project? You have come up with the following estimates of the projects with cash flows. We and our partners use cookies to Store and/or access information on a device. b. Jella Cosmetics is considering a project th, An investment project has annual cash inflows of $4,500, $5,600, $6,400, and $7,700, and a discount rate of 12%. A project requires an initial investment in equipment of $90,000 and then requires an initial investment in working capital of $10,000 (at t = 0). The firm wants to determine and compare the net present value of these cash flows for both projects. What is the internal rate of return on this project? Firms with high operating leverage tend to have higher asset betas. You have come up with the. What is the internal rate of return for the project? False A project has an initial outlay of $2,291. The discount rate may reflect your cost of capital or the returns available on alternative investments of comparable risk.
Reflections And Enclave At Temecula Lane,
Miki Yamamoto Hawaii,
Ppd Sms Mt Domestic,
Brownlow And Coleman Medal Same Year,
Articles A