NET PRESENT VALUE

(1)Find the NPV of a project that costs $10,000 and generates OCF's of $2000 in the first year, $3000 in the 2^nd, $1500 in the 3^rd, $5000 in the 4^th, and $3000 in the 5^thyear.The cost of capital is 15%.Also find the IRR?

(2)Find the IRR of a project that costs $15,000 and generates OCF's of $3000 in the first year, $8000 in the 2^nd, $1500 in the 3^rd, $6000 in the 4^th, and $1000 in the 5^thyear.

(3)If Sales for the 1^styear are $3000, 2^ndyear are $5000 and 3^rdyear are $7000.The depreciation is $2000 each year and CoG's are 25% of Sales.If the tax rate is 20%, the cost of capital is 12% and the cost of the project is $6000 find the NPV and the IRR?

(4)Find the payback period of a project that costs $2000 and generates $500 in the 1^styear, $700 in the 2^ndyear, $800 in the 3^rdyear, $600 in the 4^thyear.Also find the IRR of the project?

(5)Find the payback period of a project that costs $5000 and generates $800 in the 1^styear, $900 in the 2^ndyear, $2800 in the 3^rdyear, $2600 in the 4^thyear.Also find the NPV of the project if the cost of capital is 12%?

(6)If Sales for the 1^styear are $10000, 2^ndyear are $15000 and 3^rdyear are $7000.The depreciation is $5000 each year.Fixed costs are $2000 every year and Variable costs are 10% of sales.If the tax rate is 25%, the cost of capital is 10% and the cost of the project is $15000 find the NPV and the IRR?

(7)A bond is selling at a premium of $300, pays a coupon of

10%, and the TTM is 5 years. What is the market yield?

8.f the price of a stock (P 0 ) is $40; the dividend paid (D 0 ) = $4; the cost of equity (R E ) = 15%, find g. 4.545%

9. AOL's dividends grow at a rate of 25% for the first 4 years, and then at a rate of 5% thereafter. If D 0 =

$15; and R E = 12%; find the price of the stock.

10. A firm evaluates all of its projects by using the NPV decision rule. What is the NPV at a

required return of 11% and 23%?

Year Cash Flow

0 -$ 29,000

121,000

214,000

310,000