Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. t needs you to analyze the impact a new project th

T needs you to analyze the impact a new project that will cause its cash flows...

50.1K

Verified Solution

Question

Finance

T needs you to analyze the impact a new project that will causeits cash flows to increase $8,000 over last year’s, and continue togrow at a constant rate of 10% per year for the foreseeable future.The discount rate is 20%. You need to analyze this in threeways.

  1. Calculate the NPV and IRR of this new project based on aninitial investment cost of $45,000 and the change in cash flowseach year, assuming the growth continuesforever.
  2. Find the NPV and IRR of this project if the project onlygenerates cash flows for 10 years.
  3. Use an embedded function in Excel to calculate the NPV of theproject if the cash flows had zero growth, and theproject only generates cash flows for 20years

Answer & Explanation Solved by verified expert
3.7 Ratings (710 Votes)
Scenario1If the growth continues forever the present value of all thefuture cash flow As per DDM model would    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

T needs you to analyze the impact a new project that will causeits cash flows to increase $8,000 over last year’s, and continue togrow at a constant rate of 10% per year for the foreseeable future.The discount rate is 20%. You need to analyze this in threeways.Calculate the NPV and IRR of this new project based on aninitial investment cost of $45,000 and the change in cash flowseach year, assuming the growth continuesforever.Find the NPV and IRR of this project if the project onlygenerates cash flows for 10 years.Use an embedded function in Excel to calculate the NPV of theproject if the cash flows had zero growth, and theproject only generates cash flows for 20years

Other questions asked by students

Q

Cystic Fibrosis (CF) is a progressive genetic disease that affects the lungs and digestive system as...

Biology
Q

A 10 g bullet is fired with 450 m/s into a 10 kg block that...

Physics
Q

The GoT cups are a fast seller and you need to ensure that you have enough...

General Management
Q

Two charged spheres of radii 10 cm and 15 cm are connected by a thin...

Physics
Q

In each case determine the value of the constant c that makes the probability statement...

Statistics
Q

A college professor never finishes his lecture before the end of the hour and always...

Statistics
Q

Required information Problem 9-49 (LO 9-2)...

Accounting
Q

Please solve (3 part question). Adger Corporation is a service company...

Accounting
Q

The following T-accounts represent September activity:Required:Compute the missing amounts indicated by the letters ...

Accounting
Q

George operates a business that generated revenues of $59 million and allocable taxable income of...

Accounting
Q

The following information is from the annual financial statements of Rahesm ompany. \table[[,Year...

Accounting
Q

The result of recording a capital expenditure as a revenue expenditure is an: a. Overstatement...

Accounting