You are considering building a shopping mall. The initial investment is $1.35 million. The cash flows are
Question:
You are considering building a shopping mall. The initial investment is $1.35 million. The cash flows are $460,000 for year 1, $200,000 for year 2, $160,000 for year 3, and $130,000 for year 4. What are the net present value (NPV) and profitability index (PI) of the project if the cost of capital is 11%? Compute the internal rate of return (IRR) for the project.
What is the NPV of the shoppingmall? (Round to the nearestcent.)
What is the PI of the shoppingmall? (Round to two decimalplaces.)
What is the IRR of the shoppingmall? (Round to two decimalplaces.)
2.A project has an initial investment of $199,400 and will generate 5 annual cash flows of $57,200. Assume a cost of capital of 15.4%. Calculate the profitability index (PI)
The present value of the cash inflows is ? (Round to the nearestcent.)
The profitability index is ?
3.A project has an initial investment of $200,000 and will generate 5 annual cash flows of $60,000. Assume a cost of capital of 15%. Calculate the profitability index (PI).
The present value of the cash inflows is ? (Round to the nearestcent.)
The profitability index is ? (Round to two decimalplaces.)
4.A factory costs $410,000. You forecast it will produce cash inflows of $113,000 in year 1, $280,000 in year 2, and $350,000 in year 3. The cost of capital is 11%. What is the net present value (NPV) of the factory?
The NPV of the factory is ? (Round to the nearestcent.)
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston