Elite Gaming plans to develop a mobile app. Development of the app will require an investment of $800,000 immediately as well as another $800,000 two years from today. Elite expects that cash flow from the app will begin five years from today and be $1.1 million per year for three years. In other words, there will be a cash flow from the app of $1.1 million 5 years from today, $1.1 million 6 years from today and a final $1.1 million 7 years from today. What is the net present value (NPV) of this project if the cost of capital is 10%? The NPV is closest to: A. $447,977 B. $773,778 C. $651,603 $407.252
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- PayPal is considering an update to its app. The update would cost 10 million dollars today, and 6 million dollars 1 year from now. In years 2-6, the update would increase PayPal's cash flows by 6 million dollars. What is the IRR of this project? expert.chegg.comAlcon Inc. is planning to invest in in-house developed mobile apps for healthcare. They have forecasted that with the new mobile apps the following are the expected cash flows that will be generated: - This project will generate $10 million at end of Year 1 which will grow at a rate of 10% for the next 4 years from Year 1 onwards (i.e.1 to 2, 2 to 3, 3 to 4,4 to 5). From Year 5 onwards, the growth rate in cash flows will stabilize at 3% per year till perpetuity. If the hurdle rate is 15% p.a. compounded continuously, what is the Present Value (at t = 0) in $millions of the Cash Flows generated (in what range will the answer be)?FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $200,000 per year. Once in production, the bike is expected to make $300,000 per year for 10 years. Assume the cost of capital is 10%. a. Calculate the NPV of this investment opportunity, assuming all cash flows occur at the end of each year. Should the company make the investment? b. By how much must the cost of capital estimate deviate to change the decision? (Hint: Use Excel to calculate the IRR.) c. What is the NPV of the investment if the cost of capital is 14%? Note: Assume that all cash flows occur at the end of the appropriate year and that the inflows do not start until year 7.
- Evelyn's Exotics and Aquatics Shoppe is considering investing $540,000 in a project. The project is expected to generate a cash inflow of $90,000 in the first year, $180,000 in the second year, $540,000 in the third year, $450,000 in the fourth year, and $0 in subsequent years. Calculate the project’s payback period in years. Round your answer to two decimal places in years. For example, if the payback period is 1 year and 6 months (1.5 years), enter “1.50”. If the payback period is 2 years and 3 months (2.25 years), enter “2.25”. If the payback period is 3 years and 4 months (3.3333 years), enter “3.33”.FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $200,000 per year. Once in production, the bike is expected to make $300,000 per year for 10 years. Assume the cost of capital is 10%. a. Calculate the NPV of this investment opportunity, assuming all cash flows occur at the end of each year. Should the company make the investment? b. By how much must the cost of capital estimate deviate to change the decision? (Hint: Use Excel to calculate the IRR.) c. What is the NPV of the investment if the cost of capital is 14%? Note: Assume that all cash flows occur at the end of the appropriate year and that the inflows do not start until year 7.JB Co. is planning to invest in a new koala theme park. The investment will generate $4.5 million p.a. for 15 years with the first cash inflow received in one year's time. The required rate of return for this type of investment is expected to be 6% p.a. for years 1-9 rising to 11% p.a. for years 10-15. What is the most JB Co. should pay for this investment now?
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- An alternative investment product of gorilla glue is expected to generate cash flows of 81,000 every 3 years. Beginning 3 years from now. Your money right now is invested in a savings account earning 7.2% EAR if the investment product is the same exact risk as your savings account, what is the value today of the gorilla glue investment product?A new computer system will require an initial outlay of $19, 250, but it will increase the firm's cash flows by $4, 100 a year for each of the next 7 years. Calculate the NPV and decide if the system is worth installing if the required rate of return is 10%.FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $176,000 per year. Once in production, the bike is expected to make $281,600 per year for 10 years. Assume the cost of capital is 10%. Calculate the NPV of this investment opportunity, assuming all cash flows occur at the end of each year. Should the company make the investment? The present value of the costs is how much(Round to the nearestdollar.) By how much must the cost of capital estimate deviate to change the decision? (Hint: Use Excel to calculate the IRR.) What is the NPV of the investment if the cost of capital is 15%? (Round to two decimal places) Note: Assume that all cash flows occur at the end of the appropriate year and that the inflows do not start until year 7.