Question: Fintech Blockchain Inc. was founded in 2017 to develop blockchain technology for the banking industry. 2. They have an opportunity to create a new cryptocurrency

Fintech Blockchain Inc. was founded in 2017 to develop blockchain technology for the banking industry.

2. They have an opportunity to create a new cryptocurrency to compete against Bitcoin.

3. They are considering investing in a new computer server for the cost of $2.5 million

4. Technology changes frequently these days, thus realizing they have four years to compete with Bitcoin. At the end of year four LaSalle Street Traders Inc. and Tokens R US, LLC will be entering the market with their cryptocurrencies forcing Blockchain Inc. to stop offering their cryptocurrency.

5. The server can be depreciated over 10 years by the straight-line method.

6. At the end of the four years Blockchain Inc. assumes the server will be worth $1.35 million and they will sell the server.

7. Their cost of capital is 12%, which is higher than their normal borrowing cost of 7%

8. Operating revenue for this project =$1 million per year

9. Operating expenses for this project $400,000 per year

10. Tax rate = 23%

What is the NPV of this project?

Show the calculations in a table format

Step by Step Solution

★★★★★

3.36 Rating (146 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The following formula may be used to determine the projects Net Present Value NPV NPV Cash Flow 1 rt Initial Investment Where Cash Flow Expected cash ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Banking Questions!

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...

Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...

1. Find the perimeter of each figure. 2. 52 feet 40 feet 52 feet 72 feet 11 kilometers 20 kilometers 35 kilometers

A gas stream containing n-hexane in nitrogen with a relative saturation of 90% is fed to a condenser at 75C and 3.0 atm absolute. The product gas emerges at 0C and 3.0 atm at a rate of 746.7m3/h....

1. Do you believe Evos pricing strategy for evogear.com meets the five pricing objectives outlined in the text? Provide examples for each objective. In a recent year, Evo, the Seattle-based snow and...

A University degree program enrolled this year r female and s male students. If students are registered at the University in a completely random order, what is the probability that, for k min(r, s),...

Bond Yields Ngata Corp. issued 12-year bonds 2 years ago at a coupon rate of 9.2 percent. The bonds make semiannual payments. If these bonds currently sell for 104 percent of par value, what is the...

Review the latest ACFE's Report to the Nations on Occupational Fraud and Abuse and comment, include one area of fraud that may have surprised you and what you think is necessary to prevent or at...

The Elbow Bend Hotel is located in Calgarys East Village and has 100 Rooms total. The breakdown of room types is as follows: 40 Deluxe Rooms, 50 Executive Rooms and 10 Suites. The Suites are always...

3. Transition coordination can be distinguished from transition planning by its focus on systems-level as well as individual-level interventions. Transition systems include a staggeringly complex...

Cory Rogers of CMG Research was happy to call Nick Thomas to inform him that Auto Concepts survey data were collected and ready for analysis. Of course, Cory had other marketing research projects and...

A photograph of a bullet shows a Mach angle of $32^{\circ}$. Determine the speed of the bullet for standard air.

In Exercises 7778, use a coding matrix A of your choice. Use a graphing utility to find the multiplicative inverse of your coding matrix. Write a cryptogram for each message. Check your result by...

For the bar magnet in Figure P28.18, which of the four locations labeled 1,2,3,4 has the greatest density of magnetic field lines? Data from Figure P28.18 N d 2 P.P. d S 3

In what type of electrical conductor could the charge on the charge carriers in a current have a magnitude other than $e$ ?

Acme Inc. is developing the next generation financial tracking program, and Alice has been giver the task of writing the encryption component, which will encrypt each user's data in a file on the...

A fast-food restaurant averages 150 customers per hour. The average processing time per customer is 90 seconds. a. Determine how many cash registers the restaurant should have if it wishes to...

Division Qs current turnover is 2 and its return on sales ratio is 0.8. The division is considering a sales promotion that would increase its current return on sales ratio by 20%, but decrease its...

When production capacity is limited and it is possible to obtain additional customer orders, a firm must consider its opportunity costs to evaluate the profitability of these new orders. Do you agree...

What is the main advantage and the main obstacle in using market-based transfer prices?

Mr. Bartletts will specified that, upon liquidation of any asset, the proceeds be divided among his wife, his son, and his sister in the ratio of 7 : 5 : 3. a. If the son received $9500 from the sale...

Three insurance companies agree to jointly insure a cargo ship for $38.6 million. If insurers A, B, and C allocate premiums received and accept the risk in the ratio 3 : 8 : 5, respectively: a. How...

Use the currency exchange rates in Table 3.2 to calculate the equivalent amounts of currencies.