Question
FOR THIS AND THE NEXT 2 QUESTIONS. What are the NPV and IRR of the following project? Cost of capital is 13%. You may use
FOR THIS AND THE NEXT 2 QUESTIONS. What are the NPV and IRR of the following project? Cost of capital is 13%. You may use spreadsheet financial calculator. Please fill in the table below.
| Year | Cash Flow |
| 0 | -30 |
| 1 | 16 |
| 2 | -25 |
| 3 | 49 |
| NPV | -$1.46 |
| IRR | 10.93% |
Calculate the projects Profitability index (PI). You must show your manual work to earn credit.
Consider the following set of net cash flows and the annual salvage values for a new delivery truck purchased by ABC Transportation Company. Cost of capital is 10%. What is the projects optimal economic life?
| Year | NCF | Salvage |
|
|
| Value |
| 0 | -22,500 | 22,500 |
| 1 | 7,000 | 18,000 |
| 2 | 7,000 | 14,800 |
| 3 | 7,000 | 11,000 |
| 4 | 7,000 | 8,000 |
| 5 | 7,000 | 0 |
2 years
3 years
4 years
5 years
The purpose of Economic Life Analysis is to:
Determine the optimal investment life of a project
Determine the optimal cost of capital for a project
Evaluate two mutually exclusive projects for their crossover rate
Determine the optimal capital budget of a project
None of the above
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Ziglar On Selling The Ultimate Handbook For The Complete Sales Professional
Authors: Zig Ziglar
1st Edition
0785288937, 978-0785288930
