A project that will provde annual cash flows of $2,350 for nine years costs $9,700 today.a. At a required return of 12 percent, what is the NPV of the project? (Do not roundintermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)b. At a required return of 28 percent, what is the NPV of the project? (A negative answershould be indicated by a minus sign. Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)c. At what discount rate would you be indifferent between accepting the project andrejecting it? (Do not round intermediate calculations and enter your answer as apercent rounded to 2 decimal places, e.g., 32.16.)а.NPVb.NPVC.Discount rate%

All cash flows are discounted with an appropriate discounting rate to arrive at their present value,…

a. At a required return of 12 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) p. At a required return of 28 percent, what is the NPV of the project? (A negative answ should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) а. NPV

a. At a required return of 12 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) p. At a required return of 28 percent, what is the NPV of the project? (A negative answ should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) а. NPV

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 12P

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Matollows and 250 shillings in the following year. After that, dividends are expected to grow at constant 5% per year. If the required rate of return is 10%, what price should investors pay for such shares today? 4. Suppose a firm is considering a project that would require an initial cash outlay of 15 million shillings and expected to generate shs 4.5 million each year for the next 4 years. The firm assumes that the prices and costs increases at the same rate and that the required rate of return expressed in nominal terms is 14%. The firm also practices a policy whereby cash flows are stated at the prices of period zero. The inflation rate is expected to be 5%. (a)Outline two ways in which the effects that inflation has on the acceptability of investment projects could be considered. (b)Using the NPV technique, is the project worth taking? What have you learned from your analysis as far as treating inflation in investment analysis is concerned? 30/2021 4:39:41 PM Page 1 of 2
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