Calculate the net present value of the project

Assignment Help Finance Basics
Reference no: EM132774736

Paladin Ltd requires 11% pa required rate of return and has a required payback period of 2 years. Paladin is considering a new project that will cost $60,000 and provide the following expected after tax cash flows. (Cash flows occur at the end of each year.)

End of Year Cash flow of Project ($)
1 20,000
2 30,000
3 15,000
4 12,000

a. Calculate the Net Present Value (NPV) of the Project. (Show answer correct to the nearer cent.)
b. Calculate the Present Value Index or benefit/cost ratio of the Project. (Show answer correct to four decimal places.)
c. Recommend under each criterion and overall if Paladin should accept the project or not.

Reference no: EM132774736

Questions Cloud

What would be the current price of the share : Knight Ltd's current dividend is $2.00 per share. Knight is expected go through a rapid growth stage and the annual dividends are expected to grow at 15% a year
What correct journal entry to record the amount due : Directors made a call for the remaining $1 per share. The correct journal entry to record the amount due to the company for the call instalment is
How many years will it take her to pay back : If she borrows the funds from Bendigo Bank and pay $525 per month how many years will it take her to pay back the loan? (Show answer correct to two decimal plac
Which is not a reason for declaring a share dividend : Which is not a reason for declaring a share dividend? To conserve the company's cash instead of declaring a cash dividend. / To give shareholders extra shares.
Calculate the net present value of the project : Paladin Ltd requires 11% pa required rate of return and has a required payback period of 2 years. Paladin is considering a new project that will cost $60,000
Which accountants do not recognise internally generated : Which Accountants do not recognise internally generated goodwill because? Which a capitalisation ratio of 2:1 compared to 2.5:1 means
What is the price of the bonds : Union Local School District has bonds outstanding with a coupon rate of 3.6 percent paid semiannually and 12 years to maturity. The yield to maturity on these b
Annual interest cost of outstanding debt securities : -Explain how an increase in annual interest cost of outstanding debt securities could affect the results of Company X's operations in subsequent years and why i
Which statement relating to workers compensation insurance : Which statement relating to workers' compensation insurance is incorrect? It is compulsory for all employers to take out workers' compensation insurance.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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