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Business: NPV, IRR, Payback, WACC, and Operating Cash Flow

1. Blanchford Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected.

WACC = 10%

Year: 0 1 2 3 4

Cash flows: -$1,000 $475 $475 $475 $475

$482.16
$496.38
$505.69
$519.05
$524.72

2.
Tapley Dental Associates is considering a project that has the following cash flow data. What is the project's payback?

Year: 0 1 2 3 4 5

Cash flows: -$1,000 $300 $310 $320 $330 $340

2.11 years
2.50 years
2.71 years
3.05 years
3.21 years

3.
Ryngaert Medical Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected.

WACC = 10%

Year: 0 1 2 3 4

Cash flows: -$1,000 $400 $405 $410 $415

$241.24
$255.83
$268.54
$274.78
$289.84

4.
Rockmont Recreation Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected.

Year: 0 1 2 3 4

Cash flows: -$1,000 $250 $230 $210 $190

-5.15%
-3.44%
-1.17%
2.25%
3.72%

5.
As a member of Gamma Corporation's financial staff, you must estimate the Year 1 operating net cash flow for a proposed project with the following data. What is the Year 1 operating cash flow?

Sales $33,000

Depreciation $10,000

Other operating costs $17,000

Interest expense $4,000

Tax rate 35%

$ 9,500
$10,600
$11,700
$12,800
$13,900.

Solution Summary

The solution answers various business questions regarding NPV, IRR, Payback, WACC, and operating cash flow.

$2.19