QUESTION 3 You start to plan a big project. The initial purchase of the land and materials will cost $90 million today. The project will generate $15 million of income per year for the next 12 years. At the end of the 12 th the land (Hint: CF in year 12=- $5 million). The IRR equals 0% 11.42% year, you will need to spend $20 million to restore 12.35% 7.29%

QUESTION 3 You start to plan a big project. The initial purchase of the land and materials will cost $90 million today. The project will generate $15 million of income per year for the next 12 years. At the end of the 12 th the land (Hint: CF in year 12=- $5 million). The IRR equals 0% 11.42% year, you will need to spend $20 million to restore 12.35% 7.29%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question 5 An investment of $50,000 is made to purchase machinery that will allow us to manufacture a new product. The annual expenses to make the product are (5,000 + 5x) and the revenues from the product are 30 x, where x = the number of products sold each year. How many products must be sold per year, x, to break even? Consider a 7 year project life and an MARR of 12%.
Question 9: You have a opportunity to make a investment that has $10.000,000 landing, 1.500.000 machine, outsourcing 500.000 and finance cost 1.000.000. Machines have 1.000.000 scrap value at end of 5th year. You will pay interest payment at the end of project, that is $400.000. If you make this investment now, you will receive $4.500,000 one year from today, $3.000,000, $5.000,000 and $ 4.000,000 respectively. The appropriate discount rate for this investment is 15 percent. Tax rate is % 30. Should you make the investment?
QUESTION 5 The initial cost of a project is 1050000 and annual income is 130000. The MARR is 10 percent/year. Find DPBP.
Question 5 Jimmy Corporation is considering to start a new project. If the project is launched, cost savings can be generated in each of the next 5 years are as follows: Year Cost Savings $40,000 $60,000 $25,000 $42,000 3 4 5 $10,000 To successfully launch the project, the company needs to have a new machine and additional net working capital at the beginning of the project (Year 0). The price of the machine is $80,000, and it requires an additional installation cost of $10,000 to fit the machine for the project. In five years, the machine can be sold at $20,000. It is known that the machine would apply five-year MACRS for tax purpose. To start the project, it requires $30,000 net working capital in year 0, and this amount will be recovered when the project is ended at the end of year 5. The appropriate discount rate for this project is 10%, and the tax rate is 15%. Year 3-year MACRS percent 5-year MACRS Percent 7-year MACRS percent (%) 33.33 (%) 20.00 (%) 1 14.29 44.45 32.00 24.49 3…
Intro You are evaluating an investment project costing $49,000 initially. The project will provide $3,000 in after-tax cash flows in the first year, $4,000 in the second year and $7,000 each year thereafter for 10 years. The maximum payback period for your company is 9 years. Part 1 What is the payback period for this project? 0+ decimals Submit Part 2 Should your company accept this project? Yes No Submit
QUESTION 1 XYZ is evaluating a project that would require an initial investment of $72,300.00 today. The project is expected to produce annual cash flows of $8,400.00 each year forever with the first annual cash flow expected in 1 year. The NPV of the project is $7,500.00. What is the IRR of the project? O 11.62% (plus or minus 0.02 percentage points) 10.53% (plus or minus 0.02 percentage points) 10.37% (plus or minus 0.02 percentage points) 12.96% (plus or minus 0.02 percentage points) O None of the above is within 0.02 percentage points of the correct answer
Question 3 You are considering the following three mutually exclusive projects. The required rate of return for all three projects is 14%. Year 1 3 A $ (1,000) $ 300 $300 $ 600 B $(5,000) $ 1,700 $ 1,700 $1,700 $1,700 C $(50,000) $0 $15,000 $ 28,500 $ 33,000 2 pts $300 What is the IRR of the best project? % terms to 2 decimal places w/o % sign Next
Question 6 (B/C Analysis): A) Construction Project You are planning to invest your money in a new project that will have a first cost of $1 million and an annual maintenance cost of $50,000 per year. The income of the project is expected to be $300,000 per year. The project will have an 10-year life. At an interest rate of 10% per year compounded, should the project be undertaken (Perform B/C Analysis)? B /C = B )Alternative Investment If there is another option which, is you invest the same amount (1,000,000) in an investment company that gives 3% per year rate of return, The investment will will be for 10-year . How much the investment company will give every year? Which option would be better?
. If you invest $10,000 now into a project that will yield net revenues of $1.327 at the end of each year for 12 years, what is the internal rate of return (IRR) of your investment? O a 18% Ob 10% O. 16% Od. 8% Oe 15%
Urgent need pls Your firm is considering a project with a discount rate of 12%. If you start the project today, your firm will incur an initial cost of $480 and will receive cash inflows of $320 per year for 3 years with the first cashflow occurring one year from today. If you instead wait one year to start the project, the initial cost one year from today will rise to $520 and the cash flows will increase to $375 a year for the following 3 years with the first positive cashflow occurring two years from today. Would your firm be better off starting the project now or waiting to start the project in one year? What is the VALUE of the option to wait? Explain your answer clearly, including the NPVs of the two choices.
IRR A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years, and a cost of capital of 8%. What is the project's IRR? Round your answer to two decimal places. %
Problem 1. Multiple-Choice (8 2 OLf you invest $14,000 now into a projeet that will yield net evenue of $1,763 at the end of each year for 12 years, what is the IRK of your investment a) 15 b) 10% )9% d) 12 ej 7% D None of the above 02 it you invent $10,000 nuw into a project that will yield net tevenue of S1.560 the end of each year for 12 years, what is the ERR of your investment if your reinvestment rate is 9% per year a) 10% b) O d) 7% 06 012% None of the above 03. How much can you afford to pay for a 56,000 bond that pays 7% interest annually and will maturs 20 years hence if you desire to earn 10% on your investment? a)54,319 b) $2,979.8 ) $2.7435 d) $6,000 )53,227 ) None of the above Q4. A machine costs $40,000 and is expected to save $16,200 per year while in operation, If MARR - 20, what is the discounted payback period? a)6 years b) 5 years c) 4 yeap d) 3 years e) 7 years ) None of the above Q5. A piece of equipment is purchased for $20,000, will generate revenues of $4,000…

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