Question: Use Scenario 2 to answer questions 2A, 2B, and 2C (5, 6, and 7) below. Scenario 2: A flood control project has a construction cost

 Use Scenario 2 to answer questions 2A, 2B, and 2C (5,

Use Scenario 2 to answer questions 2A, 2B, and 2C (5, 6, and 7) below. Scenario 2: A flood control project has a construction cost at t=0 of $400,000. The project is expected to generate revenue (or cost savings) of $32,000 the first year, and revenue will increase by 12% each subsequent year through the end of year 10. Question 5 5 pts 2A. Assume the effective interest rate is 7% per year. What is the net present value of the project? Question 6 5 pts 2B. Assume the effective interest rate is 4% per year and the net present value of the project is $-322,720. What is the annual worth of the project? Question 7 5 pts 2C. Use the following information to calculate the internal rate of return of the flood control project. Interest Rate, i Net Present Value (NPV) i = 7.0% NPV = 13,161 i= 9.0% NPV = -9,283 (Note: enter your answer as a percentage, rounded to two decimal places without the percentage sign. If your answer is 10.25%, enter "10.25" as your answer.) Use Scenario 2 to answer questions 2A, 2B, and 2C (5, 6, and 7) below. Scenario 2: A flood control project has a construction cost at t=0 of $400,000. The project is expected to generate revenue (or cost savings) of $32,000 the first year, and revenue will increase by 12% each subsequent year through the end of year 10. Question 5 5 pts 2A. Assume the effective interest rate is 7% per year. What is the net present value of the project? Question 6 5 pts 2B. Assume the effective interest rate is 4% per year and the net present value of the project is $-322,720. What is the annual worth of the project? Question 7 5 pts 2C. Use the following information to calculate the internal rate of return of the flood control project. Interest Rate, i Net Present Value (NPV) i = 7.0% NPV = 13,161 i= 9.0% NPV = -9,283 (Note: enter your answer as a percentage, rounded to two decimal places without the percentage sign. If your answer is 10.25%, enter "10.25" as your answer.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
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!