Question
Question 1 You are evaluating purchasing the rights to a project that will generate after tax expected cash flows of $96k at the end of
Question 1 You are evaluating purchasing the rights to a project that will generate after tax expected cash flows of $96k at the end of each of the next five years, plus an additional $1,000k at the end of the fifth year as the final cash flow. You can purchase this project for $509k. If your firm's cost of capital (aka required rate of return) is 15.8%, what is the NPV of this project?Provide your answer in units of$1000,thus,$15000=15kand thus you should enter 15for your answer.
Question 2 You are considering the purchase of an investment that would pay you $5,000 per year for Years 15, $3,000 per year for Years 68, and $2,000 per year for Years 9 and 10. If you require a 9.5 percent rate of return, and the cash flows occur at the end of each year, then what is the MOST you would be willing to pay for this investment?Answer to 0decimal places.
Question 3 Royal Dutch Petro (RDP) is considering a new equipment purchase that would replace some existing equipment. The old equipment has a Book Value (BV) of $377 thousand and RDP estimates that the equipment could be sold for ONLY $218 thousand. What is the After Tax Salvage Value (ATSV) of the old equipment that RDP should use in their capital budgeting analysis? Assume the tax rate = T= 35%.Answer to 2 decimal points, in units of thousands, thus 15,123 would be 15.12
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