You want to start a new project that will require an initial investment of USD 3000...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You want to start a new project that will require an initial investment of USD 3000 and then will continue for 10 years with following cash flows. Your required return is 25% and you want to recover your investment within 4 years. Calculate Payback Period, NPV, IRR, and Profitability Index and recommend whether you should invest or not. Give your justifications. 25% PP NPV 0 Year O 1 Year 1 2 Year 2 3 Year 3 4 Year 4 5 Year 5 6 Year 6 7 Year 7 8 Year 8 9 Year 9 10 Year 10 -3000 0 500 600 2000 -800 2000 1900 1900 1200 1100 IRR You want to start a new project that will require an initial investment of USD 3000 and then will continue for 10 years with following cash flows. Your required return is 25% and you want to recover your investment within 4 years. Calculate Payback Period, NPV, IRR, and Profitability Index and recommend whether you should invest or not. Give your justifications. 25% PP NPV 0 Year O 1 Year 1 2 Year 2 3 Year 3 4 Year 4 5 Year 5 6 Year 6 7 Year 7 8 Year 8 9 Year 9 10 Year 10 -3000 0 500 600 2000 -800 2000 1900 1900 1200 1100 IRR
Expert Answer:
Answer rating: 100% (QA)
To calculate the payback period we need to determine the time it takes for the cumulative cash flows to equal or exceed the initial investment of 3000 ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
Many states have removed the use of solitary confinement for juveniles. True False
-
Suppose you are considering two stocks, x and y. use the following scenario to analysis to answer the questions bear market normal market bull market probability 0.25 0.4 0.35 stock A -20 15 45 STOCK...
-
The Unilever Bangladesh Limited has a plant in Narayanganj, manufacturing Dove shampoo made from the ingredient imported from abroad. The company claims that each bottle of 200ml contain on average...
-
Do social robots walk or roll? Refer to the International Conference on Social Robotics (Vol. 6414, 2010) study of the trend in the design of social robots, Exercise 2.3. Recall that in a random...
-
Refer to the information in Exercise. Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming...
-
For each of the following situations, calculate a \(95 \%\) confidence interval for the mean ( \(\sigma\) known), beginning with the step, "Identify the critical value of \(z\)." X 50.00, X = 3.00 X...
-
A bond trader purchased each of the following bonds at a yield to maturity of 8%. Immediately after she purchased the bonds, interest rates fell to 7%. What is the percentage change in the price of...
-
"The post states a single concept, definition, and how you would utilize this in the business world?
-
a. Johnson plans to use the preceding ratios as the starting point for discussions with RR's operating team. Based on the data, does RR seem to be following a relaxed, moderate, or restricted current...
-
How do you find the over/underapplied overhead with these numbers? Estimated Overhead Cost $240,000 Estimated Direct Labor Hours 29,000 Actual Direct Labor Hours 31,587 Estimated Machine Hours 74,000...
-
In 2004, Jui-Chen Lin, a citizen of China, entered into an agreement with Robert Chiu and Charles Cobb, citizens of the United States, to form an LLC to acquire and operate a fast-food restaurant in...
-
What is the purpose of timelines in an investigation?
-
Fantastic Sams and Defendants PSTEVO, LLC and Jeremy Baker entered into a franchise agreement pursuant to which Fantastic Sams granted PSTEVO a franchise to operate a Fantastic Sams Salon. According...
-
Amanda Forbes was hired as a nail technician by Showmann, Inc., in 2011. In 2017, Forbes attended a work-related holiday party where Showmann distributed raffle tickets to employees. One of the...
-
What are the two categories of data mining and knowledge discovery software?
-
class to make it an abstract class and change the getItemCat(), getItemName() and getItemDescription() definitions to make them abstract methods. You are then required to design and implement three...
-
A bubble-point liquid feed is to be distilled as shown in Figure. Use the Edmister group method to estimate the mole-fraction compositions of the distillate and bottoms. Assume initial overhead and...
-
Harold Conners (Social Security number 785-23-9873) lives at 13234 DeMilo Drive, Houston, TX 77052, and is self-employed for 2012. He estimates his required annual estimated tax payment for 2012 to...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family. Ivan and Irene have the following investment income, in addition to that reported in Chapter 1: Dividends...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1 and 2. On September 1, Irene opened a retail store that specializes in sports car...
-
In the FRED database, find a variable that is available in both a seasonally adjusted form and a not seasonally adjusted form. Plot both over time and describe how large the seasonal variation in the...
-
How does each of the following variables behave over the business cycle? Develop graphs to show your results and give economic explanations. a. Real imports b. Federal government receipts c. Housing...
-
An economic variable is persistent if declines in the variable tend to be followed by more declines, and increases by more increases. This question asks you to study the persistence of the civilian...
Study smarter with the SolutionInn App