Determine the net present value of the project

Assignment Help Finance Basics

Reference no: EM131788460

Question: Davis Chili Company is considering an investment of $15,000, which produces the following inflows:

Year Cash Flow

1 $8,000

2 7,000

3 4,000

You are going to use the net present value profile to approximate the value for the internal rate of return. Please follow these steps:

a. Determine the net present value of the project based on a zero discount rate.

b. Determine the net present value of the project based on a 10 percent discount rate.

c. Determine the net present value of the project based on a 20 percent discount rate (it will be negative).

d. Draw a net present value profile for the investment and observe the discount rate at which the net present value is zero. This is an approximation of the internal rate of return based on the interpolation procedure presented in this chapter.

e. Actually compute the internal rate of return based on the interpolation procedure presented in this chapter. Compare your answers in parts d and e.

Reference no: EM131788460

Questions Cloud

Program for the peter-the-postman problem : Write a program for the Peter-the-postman problem in Problem 3, but use a dynamically allocated array

Prime-number-finder problem : Write a program for the prime-number-finder problem in, but use a dynamically allocated array.

Cartesian product table contain : The first table contains five rows and the second table contains three rows. How many rows will the Cartesian product table contain?

What is the sensitivity of ocf to changes in the variable : What is the sensitivity of OCF to changes in the variable cost figure. A negative amount should be indicated by a minus sign

Determine the net present value of the project : Draw a net present value profile for the investment and observe the discount rate at which the net present value is zero.

Correlation names or the actual table names : Which names should you use in the SELECT clause: the correlation names or the actual table names?

Throw version of new : When memory is allocated using the no throw version of new, the value returned can be tested to check whether the operation failed by checking

Be ruthlessly concise without missing important detail : Be ruthlessly concise without missing important detail. Feel free to include speaker's notes where you'd have more detail

Discuss problem related to the proposed contract of texas : The Bagwell Company has a proposed contract with the First Military Base Facility of Texas. The initial investment in land and equipment will be $90,000.

User Account

All Pages