A company expects to have net cash inflows of $100,000 per year from a capital p

Question

A company expects to have net cash inflows of $100,000 per year from a capital project over the next five years. If the company's cost of capital is 12%. compounded annually, and the cost of the capital project is $350,000, what is the net present value of the project? $(10.478). $ 360,478. S 350,000. $ 10,478. A company needs $5,000,000 in five years to pay off bonds. If the company can invest its money at 7%, compounded quarterly, how much must it invest today in order to accumulate the $5,000,000? $ 210,956. $ 869.453. $3,564,931. $3,534,123. A large corporation had cash revenues of $6,000,000 and cash expenses of $4,200,000 for the current year. It owns depreciable assets on which depreciation of $900,000 of depreciation is allowed by the tax laws. If the company has an average income tax rate of 40%. what is its after tax cash flow for the current year"? $1,080,000. $1,440,000. $1,800,000. $ 900,000. a company wants to accumulate $500,000 in ten years. It intends to invest funds at 9% interest, compounded semiannually, into a sinking fund to accomplish this. How much will the semiannual investment need to be to accumulate the $500,000? $207,321. $38,438. $9,773. $15,938.

Explanation / Answer

22. D. 10,478

NPV of the cash inflows = 360,478

Less: Cost of the project 350,000

NPV of the project = 10.478

23. d. 3,534,123

PV = FV / (1+R)^N

PV = 5,000,000/ (1+0..175)^20 = 3,534,123

24. b . 1,440,000

25. d. 15,938

Sinking fund contribution = Par value of the bond / [{(1+r)^n} -1]/r

500,000/ [{(1+.045)^20}-1]/.045 = 15,938

r = rate of interest = 9% / 2 = 4.5%

n = number of payments = 10 years *2 times = 20

Cash flows 12% PV Factor NPV 100000 0.893                    89,300 100000 0.797                    79,700 100000 0.712                    71,200 100000 0.636                    63,600 100000 0.567                    56,700                 360,500

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