1. The ABC Resort is redoing its golf course at a cost of $843,000. It expects to generate cash flows of $563,000, $764,000 and $132,000 over the next three years. If the appropriate discount rate for the company is 18.1 percent, what is the NPV of this project (to the nearest dollar)?
2. A project has an initial cost of $340,000 and is estimated to produce cash flows of $X at the end of each year for 8 years. If the internal rate of return for the project is 20.0% p.a. effective, calculate X (to the nearest dollar).
3. A company is in the process of constructing a new plant at a cost of $11 million. It expects the project to generate cash flows of $10 million, $6 million, and $10 million over the next three years. The cost of capital is 12.4 percent p.a.What is the net present value of this project? (in millions to three decimals)
4. Albury Company is adding a new assembly line at a cost of $8.5 million. The company expects the project to generate cash flows of $2 million, $3 million, $4 million, and $5 million over the next four years. Its cost of capital is 16 percent. What is the internal rate of return that Albury can earn on this project? (Round to the nearest percent.) HINT: Use a financial calculator or the Excel function: =IRR(values,[guess])
5. A company is considering an investment that will cost $743,000 and have a useful life of 5 years. The cash flows from the project are expected to be $417,000 per year in the first two years then $84,000 per year for the last 3 years. If the appropriate discount rate is 16.0 percent per annum, what is the NPV of this investment (to the nearest dollar)?
6. Kyoto Company is in the process of constructing a new plant at a cost of $30 million. It expects the project to generate cash flows of $13,000,000, $23,000,000, and 29,000,000 over the next three years. The cost of capital is 20 percent. What is the payback period for this project?