# Net present value | Accounting homework help

What is the present value of the following cash flows at a discount rate of 9%?

 Year 1 \$100,000 Year 2 \$150,000 Year 3 \$200,000

a. \$123,341.60

b. \$450,000

c. \$405,950.68

d. \$372,431.81

Suppose Blue Hamster Manufacturing Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of \$2,225,000. The project is expected to generate the following net cash flows:

Year Cash Flow
1 \$300,000
2 \$475,000
3 \$425,000
4 \$500,000

Blue Hamster Manufacturing Inc.’s weighted average cost of capital is 7%, and project Beta has the same risk as the firm’s average project.

Based on the cash flows, what is Project Beta’s NPV?

a. \$1,423,631

b. -\$376,369

c. -\$3,026,369

d. -\$801,369

The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing \$410,000. The Sisyphean Company expects cash inflows from this project as detailed below:

Year 1 Year 2 Year 3 Year 4
\$200,000 \$225,000 \$275,000 \$200,000

The appropriate discount rate for this period is 16%.

The net present value (NPV) for this project is:

a. \$540,661

b. \$227,078

c. \$151,385

d. \$216,265

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