accounting
isaevy
Multiple Choice Question 56 |
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Net present value: The Cyclone Golf Resorts is redoing its golf course at a cost of $2,744,320. It expects to generate cash flows of $1, 223,445, $2,007,812, and $3,147,890 over the next three years. If the appropriate discount rate for the firm is 13 percent, what is the NPV of this project?
[removed] | $4,836,752 |
[removed] | $2,092,432 |
[removed] | $3,112,459 |
[removed] | $7,581,072 | |
Multiple Choice Question 58 | ||
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Net present value: Cortez Art Gallery is adding to its existing buildings at a cost of $2 million. The gallery expects to bring in additional cash flows of $520,000, $700,000, and $1,000,000 over the next three years. Given a required rate of return of 10 percent, what is the NPV of this project?
[removed] | $197,446 |
[removed] | $1,802,554 |
[removed] | -$1,802,554 |
[removed] | -$197,446
ANS: D Learning Objective: LO 2 Level of Difficulty: Medium Feedback: Initial investment = $2,000,000 Length of project = n = 3 years Required rate of return = k = 10% Net present value = NPV
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Multiple Choice Question 62 | ||
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Payback: Elmer Sporting Goods is getting ready to produce a new line of gold clubs by investing $1.85 million. The investment will result in additional cash flows of $525,000, $812,500, and 1,200,000 over the next three years. What is the payback period for this project?
[removed] | 3 years |
[removed] | More than 3 years |
[removed] | 2.43 years |
[removed] | 1.57 years | |
Multiple Choice Question 71 | ||
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Internal rate of return: Quick Sale Real Estate Company is planning to invest in a new development. The cost of the project will be $23 million and is expected to generate cash flows of $14,000,000, $11,750,000, and $6,350,000 over the next three years. The company's cost of capital is 20 percent. What is the internal rate of return on this project? (Round to the nearest percent.) 21.57177%
[removed] | 22% |
[removed] | 20% |
[removed] | 28% |
[removed] | 24%
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Problem 10.42 | ||
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An investment of $89 generates after-tax cash flows of $47 in Year 1, $71 in Year 2, and $138 in Year 3. The required rate of return is 20 percent. The net present value is closest to
[removed] | $57.41. |
[removed] | $79.33. |
[removed] | $36.37. |
[removed] | $54.37.
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Problem 10.40 | ||
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Given the following cash flows for a capital project, calculate the NPV and IRR. The required rate of return is 8 percent.
Year | ||||||
0 | 1 | 2 | 3 | 4 | 5 | |
Cash Flows | $-49740 | $14540 | $15075 | $20404 | $10577 | $5497 |
[removed] | NPV=4360. IRR=12.84% |
[removed] | NPV=3289. IRR=12.84% |
[removed] | NPV=3289. IRR=11.66% |
[removed] | NPV=4360. IRR=11.66% |
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