As a financial manager you believe that a 20 percent rate of return is reasonable given the
Question:
As a financial manager you believe that a 20 percent rate of return is reasonable given the nature of the risks involved in your company's $120,000 investment. Your company will receive $48,000 in the first year, $54,000 in the second year, and $56,000 in the third year. You expect the company will pay out $12,000 as an additional investment in the fourth year. What is the net present value of this investment given your expectations? Should this company take on this investment?
Nixxall is considering a new project that requires an initial cash investment of $78,000. The project will generate cash inflows of $29,500, $32,700, $18,500, and $10,000 over each of the next four years, respectively. How long will it take to fully recover the initial investment? The company has announced that the cutoff period is 3 years. Should the firm take on this investment?
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow