Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. A project has an initial outlay of $1,732. The project will generate annual cash flows of $783 over the 4-year life of the project

1. A project has an initial outlay of $1,732. The project will generate annual cash flows of $783 over the 4-year life of the project and terminal cash flows of $258 in the last year of the project. If the required rate of return on the project is 4%, what is the net present value (NPV) of the project? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.

2.A project has an initial outlay of $11,596. The project will generate cash flows of $7,200 in Years 1-4. What is the profitability index (PI) of this project? Assume an interest rate of 13%.Note: Enter your answer rounded off to two decimal points.

3.ABC, Inc., has a beta of 1.19. The risk-free rate is 2.91% and the market risk premium is 7.89%. What is the required rate of return on ABC's stock?Note: Convert your answer to percentage and round off to two decimal points.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions