1 answer

Suppose your firm is considering investing in a project with the cash flows shown below, that...

Question:

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.0 and 3.0 years, respectively.

Time: 0 1 2 3 4 5 6
Cash flow: –$7,400 $1,170 $2,370 $1,570 $1,570 $1,370 $1,170

NPV=____? (round your final answer to 2 decimal places.)


Answers

Year (n) Cash flow from project (CF) Cumulative cash flow PV = CF/(1+7%)^n Cumulative Discounted cash flow Formula used for PV calculation
0 -$7,400 -$7,400 -$7,400.00 -$7,400.00 CF/(1+7%)^0
1 $1,170 -$6,230 $1,093.46 -$6,306.54 CF/(1+7%)^1
2 $2,370 -$3,860 $2,070.05 -$4,236.49 CF/(1+7%)^2
3 $1,570 -$2,290 $1,281.59 -$2,954.90 CF/(1+7%)^3
4 $1,570 -$720 $1,197.75 -$1,757.16 CF/(1+7%)^4
5 $1,370 $650 $976.79 -$780.37 CF/(1+7%)^5
6 $1,170 $1,820 $779.62 -$0.75 CF/(1+7%)^6
NPV (Sum of PVs) -$0.75
Payback Period for project = 4.53 (In Years)
Payback Period (period where cumulative cash flow is zero) = X + (Y/Z)
Where,
X = Last period with a negative cumulative cash flow;
Y = Absolute value of cumulative cash flow at the end of the period X;
Z = cash flow during the period after X.

Discounted payback period is more than 6 years as cumulative discounted cash flow is negative at the end of year 6

Net present value (NPV) of the project is - $0.75

The project is not acceptable because payback and discounted payback statistics for the project are more than 2.0 and 3.0 years and NPV is negative

.

Similar Solved Questions

1 answer
Write the chemical equation that represents the enthalpy of atom combination, Δ H ∘ ac ,...
Write the chemical equation that represents the enthalpy of atom combination, Δ H ∘ ac , for SF 4 ( g ) . Include phases....
1 answer
Please provide a detailed response to the below to include specific details and examples. Auguste Kerchoff...
Please provide a detailed response to the below to include specific details and examples. Auguste Kerchoff put forth a set of guidelines in the development of new algorithms or the evaluation of existing ones. While they are not required to be followed, they are still considered to be good advice or...
1 answer
Refer to the figure below. The site consists of 8 ft of sand overlying 4 ft...
Refer to the figure below. The site consists of 8 ft of sand overlying 4 ft of clay. The groundwater level is 4 ft below the ground surface. Given that a proposed footing for a building will be 10 ft by 10 ft at a depth of 2 ft below the ground surface and the load on the foundation is 800 kips, cal...
3 answers
When an individual feels that both health and illness are a product of psychological, biological, and social forces he or she believes in the - Biomedical model - Western Perspective Model - Biopsychosocial model - Scientific approach to medicine - Prima
When an individual feels that both health and illness are a product of psychological, biological, and social forces he or she believes in the- Biomedical model- Western Perspective Model- Biopsychosocial model- Scientific approach to medicine- Primary medicine perspectiveI believe the answer is biom...
1 answer
Please write in computer or write clearly, so I can understand Answer completely, is just one...
Please write in computer or write clearly, so I can understand Answer completely, is just one exercise Construct block diagrams to represent the major control mechanisms involved. Clearly identify the physiological correlates of the controller, the plant, and the feedback element, as well as the co...
1 answer
Determining magnetics field outside of cylinder...
Given a hollow copper cylinder with iner radius a and outerradius 3a.The cylinders length is 200a and its electricalresistance to current flowing down isR.A current, I, flowsdown length of cylinder.The current is spread uniformly overthe cylinders cross-section.Determine magnetic field atradiusof 2a...
1 answer
To what extent do you think the public health professional is prepared to engage policy development...
to what extent do you think the public health professional is prepared to engage policy development skills to address public health outbreaks such as Yellow Fever, and why?...
1 answer
6. Name the stages of cellular respiration and state the region of the eukaryotic cell where...
6. Name the stages of cellular respiration and state the region of the eukaryotic cell where each stage occurs. Summarize the events of glycolysis. Identify the nutrient being oxidized, the products of glycolysis, and the energy transfer reactions. What is the net amount of ATP made per glucose? Whe...
1 answer
Create a 1-page analysis on how infection relates to sepsis. The analysis may include a discussion...
Create a 1-page analysis on how infection relates to sepsis. The analysis may include a discussion on how infection will affect sepsis, how it can increase complications, and how it can affect the outcome of the patient. You may also include highlights on how a specific patient age could affect seps...
1 answer
(1) Prepare adjusting journal entries for the company using the information given on the "Adjusting Journal...
(1) Prepare adjusting journal entries for the company using the information given on the "Adjusting Journal Entries" tab. (You may also need to refer to the "Trial Balance" tab.) Use formulas for your calculations, where possible. (2) Link the adjusting journal entries into the &#...
1 answer
Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin Greiner Company makes and sells high-quality...
Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin Greiner Company makes and sells high-quality glare filters for microcomputer monitors. John Craven, controller, is responsible for preparing Greiner’s master budget and has assembled the following data for ...
1 answer
Q Corporation and R Inc. are two companies with very similar characteristics. The only difference between...
Q Corporation and R Inc. are two companies with very similar characteristics. The only difference between the two companies is that Q Corp. is an unlevered firm, and R Inc. is a levered firm with debt of $5 million and cost of debt of 10%. Both companies have earnings before interest and taxes (EBIT...
1 answer
Two fractions have the same numerator, but different denominators
Two fractions have the same numerator, but different denominators. Is tht fraction with the greater denominator greater than or less than the fraction with the lesser denominator?...
1 answer
Core or Assume the average price of a laptop computer is 5725 with a standard deviation...
core or Assume the average price of a laptop computer is 5725 with a standard deviation of 300. The following data represent the prices of a sample of laptops at an erros lore. Coulate the each of the following prices a) $630 c) 5548 e) $914 b) 5861 d) $791 a) The Z-score of $639 is b) The z-score o...
1 answer
Which of the following is the best example of human capit Which of the following is...
which of the following is the best example of human capit Which of the following is the best example of human capital? O A. a worker pays less taxes O B. a worker gets a college degree O C. a manager devotes more spending to research and development O D. a manager buys workers more personal co...
1 answer
3. [Ti(H20)6]3+ is an octahedral complex. (9 pts) a. Name this complex. b. How many d...
3. [Ti(H20)6]3+ is an octahedral complex. (9 pts) a. Name this complex. b. How many d electrons does it have? C. Sketch the d-orbital diagram for the complex. Label the energy levels (tzg and eg) and each of the d-orbitals. d. A. is 3.99 x 10-19) (per photon). What is the value of A, in kJ/mol? e. C...
1 answer
URGENT 2) Find the x coordinates of all relative extreme points of f(x)÷4÷3 1 4.2.3.3,2+4 2+4...
URGENT 2) Find the x coordinates of all relative extreme points of f(x)÷4÷3 1 4.2.3.3,2+4 2+4 2) A) x--3,1 B)x=0 C)x=-3, 0, 1 D) x-1, 0.3 E) x-1.3 3) Find the x coordinates of all relative extreme points of fo) 4-33-6x2-1 ints of f(x)- 4- 3-6x2-1 3) A) x2, 0,3 B)x 0 C)x=-2.3 D) x--3...
1 answer
A chemical engineer is studying the two reactions shown in the table below. In each case,...
A chemical engineer is studying the two reactions shown in the table below. In each case, she fils a reaction vessel with some mixture of the reactants and products at a constant temperature of 134.0 "C and constant total pressure Then, she measures the reaction enthalpy AH and reaction entropy ...