The initial investment for the project is $250,000 and the project will run for seven years and
Question:
The initial investment for the project is $250,000 and the project will run for seven years and the following Cash flows will be generated. Cash flows are reported below.
The company also reported the following information.
Let's say the company generates $300,000 in revenue for the first year and will grow 5 percent over the investment period. The first year expense is $200,000 and can increase by 7 percent each year. This company uses the straight-line method of depreciation and the useful life for the Investment is eight years. The company is also subject to 40% tax.
Year | cash flows |
1 | 41.000 |
2 | 48.000 |
3 | 63.000 |
4 | 79.000 |
5 | 88.000 |
6 | 64.000 |
7 | 41.000 |
Questions
Using the discount rate 1.2%,3%,4%,5%,6%,7%,8%,9%,10%,11,12%,13%,14%<15%
calculate:
1. NBD,
2. PROFITABILITY INDEX,
3. AVERAGE ACCOUNTING INCOME
4. REFUND METHOD
5. DISCOUNT REFUND TIME
Note: Show all formulas and calculations.
Financial Management Theory and Practice
ISBN: 978-1305632295
15th edition
Authors: Eugene F. Brigham, Michael C. Ehrhardt