Calculate the range for the npv

Assignment Help Project Management

Reference no: EM13952939

Birkenstock is considering an investment in a nylon-knitting machine. The machine requires an initial investment of $25,000, has a 5-year life, and has no residual value at the end of the 5 years. The company's cost of capital is 12%. Known with less certainty are the actual after-tax cash inflows for each of the 5 years. The company has estimated expected cash inflows for three scenarios: pessimistic, most likely, and optimistic. These expected cash inflows are listed in the following table. Calculate the range for the NPV given each scenario.

Expected cash inflows
Year	Pessimistic	Most likely	Optimistic
1	$5,500	$ 8,000	$10,500
2	6,000	9,000	12,000
3	7,500	10,500	14,500
4	6,500	9,500	11,500
5	4,500	6,500

Reference no: EM13952939

Questions Cloud

Calculate the npv and annualized net present value : Calculate the NPV and the annualized net present value (ANPV) for each project using the firm's cost of capital of 8%. Which project would you recommend?

What is the half-width of the confidence interval : The standard hemoglobin reading for normal males of adult age is 15 g/100 ml. The standard deviation is about 2.5 g/100 ml. For a group of 36 male con- struction workers, the sample mean was 16 g/100 ml. Construct a 95% confidence interval fo..

Projected to generate cash inflows : The firm is analyzing two projects based on their RADRs. Project Sourdough requires an initial investment of $12,500 and is assigned a risk index of 6. Project Greek Salad requires an initial investment of $7,500 and is assigned a risk index of 8...

How can bootstrap confidence intervals be generated : How can bootstrap confidence intervals be generated? Name the simplest form of a bootstrap confidence interval. Are bootstrap confidence intervals exact?

Calculate the range for the npv : Known with less certainty are the actual after-tax cash inflows for each of the 5 years. The company has estimated expected cash inflows for three scenarios: pessimistic, most likely, and optimistic. These expected cash inflows are listed in the f..

How instructions are represented and handled by the cpu : What aspects of physics and mathematics are important in the design of VLSI circuits

What are the desirable properties of a confidence interval : What are the desirable properties of a confidence interval? How do sample size and the level of confidence (e.g., 90%, 95%, 99%) affect the width of a confidence interval?

Determine annual and total depreciation recorded by company : Reimer Company and Lingo Company are two proprietorships that are similar in many respects. Determine the annual and total depreciation recorded by each company during the 3 years.

What are the costs of prejudice and discrimination : Briefly discuss how religion, sexuality, political affiliation, mental illness, and/or substance abuse can also be related to prejudice and discrimination in contemporary society? What are the costs of prejudice and discrimination

User Account

All Pages