Calculate the net present value

Assignment Help Other Subject
Reference no: EM133253173

Consider a potential investment project that has an initial cash outlay of -$25,000 now and free cash flows of $8,000, $9,500 and $11,000 over the next three years.

(a) If the appropriate discount rate is 12%, calculate the net present value (NPV) of this project. Should the project be accepted or rejected? Explain why.

(b) Without doing any calculations, explain what would happen to the NPV you calculated in Part (a) if you used a discount rate of 8%. Are you more likely to accept or reject the project?

(c) If you were to calculate the internal rate of return (IRR) for this project, would it be less than or greater than 12%? Explain your answer.

(Include enough working to show you understand the calculations.)

Reference no: EM133253173

Questions Cloud

Governmental regulation confronting companies : Assess the industry prospects-draw SWOT with Bilibili and to assess the industry's future for its products and services; other considerations include potential
What cash balance do you need in retirement account : Today is your 35th birthday and it occurs to you that your current retirement savings may be insufficient to maintain for you the lifestyle to which you have be
What is the rational decision to make at expiry : A few weeks ago, you realised that you were exposed to movements in the price of oil. At that time, you hedged this exposure by entering a long call option writ
What is the firm fcf per share : A firm has 50 million shares outstanding, and a value of $7.54 billion. If its growth rate is 8.2% and its WACC is 15.4%, what is the firm's FCF per share
Calculate the net present value : Consider a potential investment project that has an initial cash outlay of -$25,000 now and free cash flows of $8,000, $9,500 and $11,000 over the next three ye
What is the expected irr for retail reit : RETAIL REIT wants to buy CORE SHOPPING CENTER from its current owner and uses the cash flow projections to value the property. RETAIL REIT will pay $30,500,000
Income approach between finland and australia : Discuss about the extent to which differences in the retirement income approach between Finland and Australia can be attributed to differences in cultural value
Determining the pe ratio? : Today the common stock of Gresham Technology closed at ?$23.90 per? share, down? $0.36 from yesterday. If the company has 4.2 million shares outstanding and ann
Compute the firm weighted average cost of capital : Montero Incorporated has a target capital structure of 45% debt and 55% equity. The firm is planning to invest in a new project that will require raising new ca

Reviews

Write a Review

Other Subject Questions & Answers

  Cross-cultural opportunities and conflicts in canada

Short Paper on Cross-cultural Opportunities and Conflicts in Canada.

  Sociology theory questions

Sociology are very fundamental in nature. Role strain and role constraint speak about the duties and responsibilities of the roles of people in society or in a group. A short theory about Darwin and Moths is also answered.

  A book review on unfaithful angels

This review will help the reader understand the social work profession through different concepts giving the glimpse of why the social work profession might have drifted away from its original purpose of serving the poor.

  Disorder paper: schizophrenia

Schizophrenia does not really have just one single cause. It is a possibility that this disorder could be inherited but not all doctors are sure.

  Individual assignment: two models handout and rubric

Individual Assignment : Two Models Handout and Rubric,    This paper will allow you to understand and evaluate two vastly different organizational models and to effectively communicate their differences.

  Developing strategic intent for toyota

The following report includes the description about the organization, its strategies, industry analysis in which it operates and its position in the industry.

  Gasoline powered passenger vehicles

In this study, we examine how gasoline price volatility and income of the consumers impacts consumer's demand for gasoline.

  An aspect of poverty in canada

Economics thesis undergrad 4th year paper to write. it should be about 22 pages in length, literature review, economic analysis and then data or cost benefit analysis.

  Ngn customer satisfaction qos indicator for 3g services

The paper aims to highlight the global trends in countries and regions where 3G has already been introduced and propose an implementation plan to the telecom operators of developing countries.

  Prepare a power point presentation

Prepare the power point presentation for the case: Santa Fe Independent School District

  Information literacy is important in this environment

Information literacy is critically important in this contemporary environment

  Associative property of multiplication

Write a definition for associative property of multiplication.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd