Calculate the net present value of the proposed investment

Assignment Help Accounting Basics
Reference no: EM131627627

Question: Bezie Foster has estimated the annual after-tax cash flows and after-tax net proceeds from sale (CFR) of a proposed real estate investment as noted below for the planned 4-year ownership period.

Year       ATCF            CFR

1          $6,200

2          $8,000

3          $8,300

4          $8,500         $59,000

The initial required investment in the property is $55,000. Bezie must earn at least 14% on the investment.

a. Calculate the net present value of the proposed investment.

b. Estimate the IRR (to the nearest whole percentage point) from the investment. c. From your findings in parts a and b, what recommendation would you give Bezie? Explain.

Reference no: EM131627627

Questions Cloud

Identify an ethical challenge facing companies today : Identify an ethical challenge facing companies today. What defines the difference between these two companies?
Define a woman as a pole dancer : Mark operates a straight Gentlemen's Club. Would Mark violate Title VII if he refuses to hire Mary
Explain the items that affect both the given classifications : Write a 350- to 700-word paper describing the amounts of current and deferred income taxes. Explain the items that affect both these classifications.
About adding multimedia effects into presentation : Discuss some of the concerns about adding multimedia effects into a presentation.
Calculate the net present value of the proposed investment : Bezie Foster has estimated the annual after-tax cash flows and after-tax net proceeds from sale (CFR) of a proposed real estate investment as noted.
What would be your pre-tax net profit be : If you bought this option for $425.25 and Alpha's stock price actually dropped to $61, what would be your pre-tax net profit be?
Sellers are based on relative supply and demand : In a free market system, transactions between buyers and sellers are based on relative supply and demand.
What role does social media play in social constructionism : How do we create our own realities? Is it OK that everyone's reality just a bit different? What role does social media play in social constructionism?
Promotional activity in marketing is to inform-persuade : The main goal of any promotional activity in marketing is to inform, persuade, and/or remind the consumer of the firms good

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is the maximum amount of cash invested by the company

The construction company in Problem 1 decides to act as the owner on the project. The construction company will be paid $500,000 for the project at the end.

  Difference does or does not exist between net income

Prepare an income statement, balance sheet, and statement of cash flows. (Assume that closing entries have been made.)

  Valuation and financial analysis

You will pick FEDEX INCORPORATION stock and perform a Valuation and Investment Analysis. You must select one of the companies that you contributed to your team portfolio. You will make a recommendation (could be "buy", "sell", or "hold"). Your ana..

  A appear only on the balance sheet b appear only on the

a appear only on the balance sheet b appear only on the income statement c are expensed as costs are incurred for

  Assignment: global staffing

Every company finds it challenging to recruit and select top executives for an international location. The nationals of the host country will be aware of the local laws and customs and may accept a lower wage as well, but may not be familiar with ..

  The lemon company made a credit sale of 20000 the invoice

the lemon company made a credit sale of 20000. the invoice was sent today with the terms 310 net 30. this customer

  Prepare pre-tax income statements under absorption and

birds eye view manufactures satellite dishes used in residential and commercial installations for satellite-broadcasted

  What key points would be addressed to the employees and why

You are presented with a unique opportunity to deliver presentations to company employees concerning this fact. What key points would be addressed to the employees and why?

  What is the increase or decrease in profits as a results of

what is the increase or decrease in profits as a results of purchasing the parts from the outside supplier rather than

  Deer valley lodge a ski area near salt lake city has plans

deer valley lodge a ski area near salt lake city has plans to eventually add five new chairlifts. suppose that one of

  The molding department of kenst company has the following

the molding department of kenst company has the following production data beginning work in process 40000 units 60

  Straight-line and effective interest method

Prepare Bond Amortization Schedules for both bonds using Straight-line and Effective Interest Method.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd