Cash flows for projects F ana G are given below The cost d capital for protects
ID: 2760474 • Letter: C
Question
Cash flows for projects F ana G are given below The cost d capital for protects of this type is 10% Assume that the forecasted cash flows are overstated and should be 8% lower than those provided by the protect analyst But a lazy financial manager. unwilling to take the time to argue with the prefects sponsors, instructs them to use a discount rate of 18%. Assume the year 5 cash flow is a perpetuity a. What are the projects true NPVs? (Do not round intermediate calculations. Round your answers to 2 decimal places.) What are the NPVs at the 18% discount rate? (Do not round intermediate calculation. Round your answers to 2 decimal pieces.)Explanation / Answer
Project F Project G Project F (8% correction) PV @ 10% Project G(8% correction) PV @ 10% 0 C0 (10,900) (10,900) (10,900) (10,900) (10,900) (10,900) 1 C1 7,900 2,180 7,268 6,607 2,006 1,823 2 C2 6,900 2,180 6,348 5,246 2,006 1,658 3 C3 5,900 2,180 5,428 4,078 2,006 1,507 4 C4 - 2,180 - - 2,006 1,370 5 C5 - 2,180 - - 2,006 1,245 NPV 5,032 (3,297) Project F PV @18% Project G PV @18% 0 C0 (10,900) (10,900) (10,900) (10,900) 1 C1 7,900 6,695 2,180 1,847 2 C2 6,900 4,955 2,180 1,566 3 C3 5,900 3,591 2,180 1,327 4 C4 - - 2,180 1,124 5 C5 - - 2,180 953 NPV 4,341 (4,083)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.