Question
Using NPV, should you invest in a project where the initial cash outflow is $31,800 and the cash inflow in the first year is $2,450
Using NPV, should you invest in a project where the initial cash outflow is $31,800 and the cash inflow in the first year is $2,450 and "grows" at a rate of 2.9 percent thereafter? Assume cost of capital is 10.9 percent. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer to 2 decimal places, e.g. 5,125.25.)
NPV of the project: = $
Should you invest in the project, yes or no? =
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Your truck has a market value of $60,800. You can sell it to your brother, who agreed to buy it now and pay $78,200 three years from now, or you can sell it to your cousin who agreed to pay you $67,500 at the end of the year. To whom should you sell the truck if your cost of capital is 9 percent? (Round answers to 2 decimal places, e.g. 25.25.)
Cash inflow, brother | $ | ||
Cash inflow, cousin | $ |
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Swifty Inc. now has the following two projects available:
Project | Initial CF | After-tax CF1 | After-tax CF2 | After-tax CF3 | |||||
1 | -11,696.56 | 5,100 | 5,900 | 9,200 | |||||
2 | -3,258.16 | 3,600 | 3,000 | - |
Assume that RF = 4.7 percent, risk premium = 10.2 percent, and beta = 1.1. Use the EANPV approach to determine which project Swifty Inc. should choose if they are mutually exclusive. (Round cost of capital and final answers to 2 decimal places, e.g.17.35% or 2,513.25.)
PMT1 | $ | ||
PMT2 | $ |
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