Question: Please use the following information to answer the remaining problems : Able Corporation has Project A with the following cash flows and a 6.7% cost
Please use the following information to answer the remaining problems:
Able Corporation has Project A with the following cash flows and a 6.7% cost of money: Numbers in parentheses are outflows. Both Year 0 and Year 3 cash flows are outflows.
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| Cash flow | $(312,000) | $ 95,000 | $120,000 | $(280,000) | $ 230,000 | $200,000 | $180,000 |
- Please calculate the net present value ______________
2. Please calculate the profitability indexes (two decimals please)_________________
3.Please calculate the modified profitability index using the terminal value approach in the textbook (two decimals please)_______________________
4.Please calculate the internal rate of return (two decimals please)_____________________________
5. Please calculate the modified internal rate of return (two decimals please and per the book)________________________
6. Please calculate the payback period (two decimals please)________________________
7. Please calculate the present value payback period (two decimals please)______________________
8. You are opening your own business and estimate the following expenses and revenues:
Revenues year 1 $210,000 growing at 9% thereafter
Cost of goods sold year 1 $121,000 growing at 10% thereafter
Operating expense year 1 $47,000 growing at 6% thereafter
Taxes all in years 20% per year
Depreciation $15,000 in year 1, $21,000 in year 2, $17,000 in year 3
No working capital is needed -- please predict the after-tax cash flows from operations for the first three years of operations below:
Year 1_______________ Year 2__________________ and Year 3______________
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