Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. ?(npv with varying required rates of return?) guba

?(NPV with varying required rates of return?) Gubanich Sportswear is considering building a new factory to...

80.2K

Verified Solution

Question

Finance

?(NPV with varying required rates of return?) GubanichSportswear is considering building a new factory to producealuminum baseball bats. This project would require an initial cashoutlay of 4,000,000 and would generate annual free cash inflows of1,200,000 per year for 7 years. Calculate the? project's NPV?given:

a. A required rate of return of 9 percent

b. A required rate of return of 11 percent

c. A required rate of return of 15 percent

d. A required rate of return of 17 percent

Answer & Explanation Solved by verified expert
4.1 Ratings (694 Votes)
Net Present value NPV is the present value of future cash inflows minus the initial investment Here since the cash flows are equal every year so it is an annuity We have to find present value of the annuity of 1200000 after 7 years We will use the present value of annuity table to find the required NPV a At rate of 9 Present value of future cash flows 1200000 PVA 9 7 Years where PVA 9 7 years is the present value of 1 annuity at 9 for 7 years since the annual payments are of equal amount of 1200000 so it will be an annuity and    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

?(NPV with varying required rates of return?) GubanichSportswear is considering building a new factory to producealuminum baseball bats. This project would require an initial cashoutlay of 4,000,000 and would generate annual free cash inflows of1,200,000 per year for 7 years. Calculate the? project's NPV?given:a. A required rate of return of 9 percentb. A required rate of return of 11 percentc. A required rate of return of 15 percentd. A required rate of return of 17 percent

Other questions asked by students

Q

9 Graph a line from the equation y 6 5x 1 9 8 7 6...

Basic Math
Q

Internet giant Zoidle, a U.S. company, generated sales of £2.5 billion in the United Kingdom in...

Accounting
Q

Kingdom Animalia is an incredibly diverse group. To date, scientists have formally named & described...

Biology
Q

Determine whether the given equations are linear or nonlinear 19x 1 0 x 19 0...

Algebra
Q

Colt Company owns a machine that can produce two specialized products....

Accounting
Q

The production department of Hareston Company has submitted the following forecast of units to be...

Accounting
Q

Turner Company owns 35% of the outstanding stock of ICA Company. During the current year,...

Accounting
Q

Required: 5. If the company uses a plantwide overhead rate based on direct labor hours,...

Accounting
Q

According to your textbook, there are several distribution strategies available for companies to distribute their...

Accounting
Q

Complete accounting cycle and financial statements The city council of E. Staatsboro approved the following...

Accounting
Q

The Churchill Corporation uses a periodic inventory system and the LIFO inventory cost method for...

Accounting
Q

Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet...

Accounting