net present value calculation

timer Asked: Jan 26th, 2016

Question description

1. East Coast Television is considering a project with an initial outlay of $X (you will have to determine this amount). It is expected that the project will produce a positive cash flow of $60,000 a year at the end of each year for the next 14 years. The appropriate discount rate for this project is 9 percent. If the project has a 12 percent internal rate of return, what is the project’s net present value?

2. Big Steve’s makers of swizzle sticks is considering the purchase of a new stamping machine. This investment requires an initial outlay of $105,000 and will generate net cash flows of $21000 per year for 8 years.
A  What is the project NPV using a discount rate of 11% should the project be accepted, why or why not?
B What is the project NPV using a discount rate of 14% should the project be accepted, why or why not?
C What is the project internal rate of return? Should the project be accepted, why or why not?

3. What is the internal rate of return for the following project? An initial outlay of $9500 resulting in a single cash inflow of $24301 in 9 years. What is the rate of return for the project?

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