Question: The initial outlay will be Rs4,00,000, and the project will generate cash flows of Rs 1,10,000 per year for 8 years. The appropriate discount rate

The initial outlay will be Rs4,00,000, and the project will generate cash flows of Rs 1,10,000 per year for 8 years. The appropriate discount rate is 10 percent. i. Calculate the NPV.

ii. Calculate the PI.

iii. Calculate the IRR.

iv. Should this project be accepted? Why or why not?

Step by Step Solution

★★★★★

3.61 Rating (165 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

i Calcul ate the NP V ANS WER The NP V of the project is Rs 10 9 43 WORK ... 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 Finance Questions!

Foxtrot Dancing will invest $2,500 per year for 8 years. What table is used to determine the amount accumulated at the end of the 8 years? a) Future value of an annuity b) Present value of a single...

The frequency response of a certain video (wide-band) BJT-CE amplifier is 30Hz to 5MHz. The BJT has (transition frequency) f= 1GHz, Cbc = 1pF, CCE = 1pF, B = 200, Ic= 5mA, and RE = 10002. Below is...

A friend of yours can invest in a multiyear project. The cost is $14,000.Annual cash flows are estimated to be $5,000 per year for six years but could vary between $2,500 and $7,000. Your friend...

18. RiverRocks, Inc., is considering a project with the following projected free cash flows: 0 -50 1 10 2 20 3 20 4 15 The firm believes that, given the risk of this project, the WACC method is the...

Your company has two divisions. One division sells software and the other division sells computers. You have decided that Dell Computer is very similar to your computer division in terms of both risk...

1. Which of the following statements about an operating lease is false? a. The lessor is responsible for maintaining the asset. b. The lessee is responsible for maintaining the asset. c. An operating...

Atlantic Control Company (ACC) purchased a machine two years ago at a cost of $70,000. At that time, the machines expected economic life was six years and its salvage value at the end of its life was...

Advanced: Expected net present value and decision whether to abandon a project after one yearA company is considering a project involving the outlay of 300 000 which it estimates will generate cash...

"You have to decide whether or not to invest in the following 3 projects. The cost of capital is 6%. Project A requires an initial investment of $1,000,000 now. The project will generate cash flows...

Journalize the following transactions of Upton Drugs: July 8 Received a $180,000, 90-day, 8% note dated July 8 from Miracle Chemical on account. Oct. 6 The note is dishonored by Miracle Chemical....

As shown in the sketch, kerosene at 90?F is being drained through 100 feet of 4 inch schedule 80 pipe from a storage tank at 10 psig to a settling tank as shown. The pipe discharge is 20 feet below...

What is the primary goal of risk management within a business? A . To increase sales and marketing reach. B . To enhance product quality. C . To identify, assess, and manage risks. D . To improve...

Does co browsing have positive effects on the customer experience? Co browsing refers to the ability to have a contact center agent and customer jointly navigate an application (e. g., web page,...

The following accounts and corresponding balances were drawn from Osprey Company's 2017 and 2016 year-end balance sheets: Account Title 2017 2016 Unearned revenue............. $4,500.................

Cool Sky reports the following costing data on its product for its first year of operations. Year, the company produced 44,000 units and sold 36,000 units at a price of $140 per unit. Manufacturing...

Selected account balances before adjustment for Atlantic Coast Realty at July 31, the end of the current year, are as follows: Data needed for year-end adjustments are as follows: ¢ Unbilled...

The following accounts and corresponding balances were drawn from Avia Company's 2017 and 2016 year-end balance sheets: Account Title 2017 2016 Unearned revenue................................

Name: LESSON 17 SESSION 2 Practice Dividing a Decimal by a Whole Number Study the Example showing one way to divide a decimal by a whole number. Then solve problems 1-5. EXAMPLE EXST Or SI The...

Shrek Casting Company is considering adding a new line to its product mix. The production line would be set up in unused space in Shrek's' main plant. The machinery's invoice price would be...

I have 40 Min left !!! QUESTION 1 Suppose you calculate the ordinary payback for a project, given the project cash flows and a required rate of return of 12%. After you calculate the ordinary...

1 Suppose you want to buy a house that costs $700,000. You are required to put 10% down, which means the amount to be borrowed is 90% of the price of the house. If you want a 30 year mortgage, and...

Need some help answering this sample midterm as soon as possible. 1. What is the future value of a 5-year ordinary annuity with quarterly payments of $75 evaluated using quarterly compounding with a...

QUESTION ONE [50] Diamond Merchant Ltd produces crushed Diamond used in exclusive jewelled pieces across South Africa. The company operates 50 diamond crushing plants across the country and because...

ABC LTD BALANCE SHEETS AS AT 31 DECEMBER ($000) 2015 2016 2017 2018 2015 2016 2017 2018 ASSETS Current Assets Cash Account Receivable Inventory Prepaid Expense Total Current Assets 515 106 212 22 855...