Purchase Solution

Feasible Investments (NPV)

Not what you're looking for?

Ask Custom Question

My Corporation has been presented with an investment opportunity which will yield end-of-year cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. What is the NPV for this investment?

Purchase this Solution
Solution Summary

This solution is comprised of a detailed explanation to answer what is the NPV for this investment.

Solution Preview

NPV is calculated by finding the present value of each cash flow, including both cash inflows and outflows, discounted at the firm's cost of capital.

NPV = sum of CFt where CF is the cash flow
...

Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Introduction to Finance

This quiz test introductory finance topics.

Operations Management

This quiz tests a student's knowledge about Operations Management

View More Free Quizzes
Related BrainMass Solutions

  • Under what conditions the project might be still desirable

    Let's suppose that a project is not financially feasible (NPV is negative). Question: Under what conditions the project might be still desirable? Can you come with arguments to keep a project even if it show a negative NPV?

  • evaluate investments

    Apart from NPV and IRR, other techniques used for evaluating investments are: 1) Payback Period: The payback method is the simplest way of looking at one or more major project ideas.

  • A Firms Investment Opportunities

    Thus the option giving maximum NPV should be chosen: Option a not feasible as the investment is more than $280000 option b NPV= 30000+25000=55000 Option c NPV= 30000+20000= 50000 option d NPV= 30000+20000+6000=56000 Thus Option d should be chosen

  • Capital Rationing Model

    By comparing the NPV of two or more uses of capital, the opportunity with the highest net present value is the better alternative.

  • Quantitative analysis: Integer programming.

    404224 Johnson Investments: Excel Integer Optimization - Maximize NPV and Optimal NPV See attached file. Johnston Investments is considering a couple of investment possibilities.

  • Julie Kowalis's investment

    We need to combine the cash inflow and cash outflow for three investments and find the NPV. As the NPV for the total investments is positive, then the investments as a whole earn at least 12%.

  • Analysis of Financial Management and Investments

    If investments are mutually exclusive we can select only 1. In this case we select the project with the highest NPV since this would result in the highest increase in shareholder wealth (NPV represents the increase in shareholders wealth).

  • Net Present Value and Internal Rate of Return

    We need to combine the cash inflow and cash outflow for three investments and find the NPV. As the NPV for the total investments is positive, then the investments as a whole earn at least 12%.

  • Sunshine Corporation Capital Budgeting - Project Selection

    The post also touches on the question of why it was not feasible to use IRR in this particular case.

  • Evaluate alternative investments for a company

    If the company has fixed budget of 5.5 million and investments are independent, Investment B & C should be accepted because the total NPV (500,000) is higher than NPV of Investment A (340,000).

View More Related Solutions