Solution-Determine the npv of the project

Determine the npv of the project

Reference no: EM133076104

This discussion has two parts to it (calculation and decision with support). Using the information, below, determine whether or not ABC Corporation will pull the trigger on this project.

ABC Corporation has the opportunity to invest in a new product line. Using the cash flow option on a business calculator or net present value (NPV) function in Excel, determine the NPV of the project and determine ABC corporation should go with the project or not. Be sure to post what your NPV is dollars, and then justify your decision with a narrative that supports your recommendation and demonstrates a full understanding of NPV.

Initial cost of project ($575,000)

Cash flow - Year 1 ($55,000)

Cash flow - Year 2 $62,000

Cash flow - Year 3 $110,000

Cash flow - Years 4 & 5 $175,000

Cash flow - Year 6 $97,000

Cash flow - Year 7 (terminal year) $37,500 which includes the $12,000 it will cost to shut down the operation

ABC Corporation's expected interest rate on investments is 6.35%

Reference no: EM133076104

Questions Cloud

Explain how statistical techniques can solve : Understanding of the principles and techniques of business research and statistical analysis taught in the course - how statistical techniques can solve

What is the maximum debt capacity : You are looking at investing in an office building. Your analysis indicates an expected Year 1 NOI of $422,000. You have contacted a lender who tells you he wil

Estimate the cash flow from sale of the property : Preparers use different terminology in referring to this final cash flow event. Which of the following is LEAST likely to be used to describe this value in a pr

Describe value in a proforma : In developing a proforma to evaluate a property, one normally has to estimate the cash flow from sale of the property at the end of a proposed holding period.

Determine the npv of the project : This discussion has two parts to it (calculation and decision with support). Using the information, below, determine whether or not ABC Corporation will pull th

What is the internal rate of return for each : The Billy Joe Company has a choice of two different investments that it can make today. What is the Internal Rate of Return for each

Fund annual sharpe ratio change : How does a fund's annual Sharpe ratio change as its annual percentage management fee increases? Explain how you know, or if it is ambiguous.

How does pandemic covid-19 affects the portfolio quality : How does pandemic Covid-19 affects the portfolio quality of Microfinance?

Purchasing power parity : Natasha Nguyen is a foreign exchange dealer for a US bank. She wishes to consider whether Purchasing Power Parity holds between the US$ and the Japanese yen. Sh

User Account

All Pages

Determine the npv of the project

Reference no: EM133076104

Reference no: EM133076104

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT