Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A project with an initial cost of $81,000 is expected to produce cash flows of $20,000 per year and net income of $9,000 for each

image text in transcribed

A project with an initial cost of $81,000 is expected to produce cash flows of $20,000 per year and net income of $9,000 for each of the next 7 years. The asset has an estimated 7-year life and a $4,000 salvage value. What is the projected payback period? 4.05 years B 9.0 years C 7.0 years D 0.25 years Question 16 5 Points A proposed project will require an initial investment of $1,000,000 and will generate net operating cash inflows of $250,000 per year for five years. What is the internal rate of return? 11% 13% O @ Less than 9% Over 15% Question 17 5 Points If your required rate of return is 6%, the present value of $1,000 to be received three years from today is $839.60. A True B False Question 18 5 Points An investment that costs $50,000 will return $15,000 operating cash flows per year for five years. Determine the net present value of the investment if the required rate of return is 14 percent. Should the investment be undertaken? Yes, the profit is $25,000. B No, the accounting return is less than 14%. @ @ @ C No, the net present value is negative at $11,045. D Yes, the net present value is positive at $1,496.50

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_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

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

Get Started

Recommended Textbook for

Finance The Basics

Authors: Erik Banks

1st Edition

0415384575, 9780415384575

More Books

Students also viewed these Accounting questions

Question

Tell me what you know about our organization and the position.

Answered: 1 week ago