Find the NPV of the investment

Assignment Help Financial Management

Reference no: EM131022563

Consider an investment that cost $150,000 and has a cash inflow of $40,000 every year for 5 years. The required return on the investment is 8%. Find the NPV of the investment and determine if it should be purchased.

Reference no: EM131022563

Questions Cloud

Life insurance and an individual universal life policy : Dan and Mary Green are in their mid-30s and have two children, ages 8 and 5. They have combined annual income of $95,000 and own a house in joint tenancy with a market value of $310,000, on which they have a mortgage of $250,000. As their ?nancial pl..

What is your expected rate of return on this stock : You recently purchased a stock that is expected to earn 14 percent in a booming economy, 9 percent in a normal economy, and lose 4 percent in a recessionary economy. There is a 18 percent probability of a boom, a 60 percent chance of a normal economy..

Sold bond with maturity : Suppose ACE Corporation sold a bond with 12-year maturity, $1,000 par value, and 8.5% coupon rate (semi-annual payment). a). Three years after the bonds were sold, the yield to maturity drops to 6%. How much would ACE bonds be selling for? b). Suppos..

What is the required rate of return on the market : Fiske Roofing Supplies' stock has a beta of 1.43, its required return is 11.75%, and the risk-free rate is 3.30%. What is the market risk premium? And what is the required rate of return on the market?

Find the NPV of the investment : Consider an investment that cost $150,000 and has a cash inflow of $40,000 every year for 5 years. The required return on the investment is 8%. Find the NPV of the investment and determine if it should be purchased.

Current market equilibrium-difference between the two yields : Suppose that, in the current market equilibrium, a 30-day treasury bill provides an annual yield of .5%, while 30-day commercial paper issued by Chipotle provides an annual yield of .75% (in both cases, the instrument pays out the principal and inter..

Two investment advisers are comparing performance : Two investment advisers are comparing performance. Adviser A averaged a 20% return with a portfolio beta of 1.5, and adviser B averaged a 15% return with a portfolio beta of 1.2. If the T-bill rate was 5% and the market return during the period was 1..

Dividends have grown at a constant rate : A stock you are evaluating just paid an annual dividend of $2.50. Dividends have grown at a constant rate of 1.5 percent over the last 15 years and you expect this to continue. (LG 3-3) If the required rate of return on the stock is 12 percent, what ..

Using the accounting based equity valuation formula : Assets and liabilities at the end of 2005 for Tripod Inc. are $4,970 and $2,220 respectively. Net income and dividends for fiscal 2005 were $500 and $200, respectively. Tripod has 100 shares outstanding as of 12/31/05. What would you be prepared to p..

User Account

All Pages