Can you help me confirm the calculations on this assignmentproject has the following estimates for net cash flow.
Year Pessimistic Cash Flow Estimate Most Likely Cash Flow Estimate Optimistic Cash Flow Estimate 1 $14,000 $20,000 $22,000 2 $19,000 $25,000 $30,000 3 $27,000 $30,000 $36,000 4 $32,000 $35,000 $39,000
At the beginning of this four-year project, the project costs are expected to be $65,000 and no expenses will be incurred thereafter. (a) Compute the cash flow for each year using the three-point estimation technique. (b) Assuming an inflation rate of 3% and the required rate of return of 8%, compute the net present value of the project.
Can you help me confirm the calculations on this assignmentproject has the following estimates for net cash flow.
| Year | Pessimistic Cash Flow Estimate | Most Likely Cash Flow Estimate | Optimistic Cash Flow Estimate |
| 1 | $14,000 | $20,000 | $22,000 |
| 2 | $19,000 | $25,000 | $30,000 |
| 3 | $27,000 | $30,000 | $36,000 |
| 4 | $32,000 | $35,000 | $39,000 |
At the beginning of this four-year project, the project costs are expected to be $65,000 and no expenses will be incurred thereafter. (a) Compute the cash flow for each year using the three-point estimation technique. (b) Assuming an inflation rate of 3% and the required rate of return of 8%, compute the net present value of the project.
Related questions
Keller Construction is considering two new investments. Project E calls for the purchase of earth moving equipment. Project H represents an investment in a hydraulic lift. Keller wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: Use Appendix B.
| Project E | Project H | |||||
| ($40,000 investment) | ($36,000 investment) | |||||
| Year | Cash flow | Year | Cash flow | |||
| 1 | $ 9,000 | 1 | $ 17,000 | |||
| 2 | 14,000 | 2 | 15,000 | |||
| 3 | 20,000 | 3 | 13,000 | |||
| 4 | 22,000 | |||||
(a) Determine the net present value of the projects based on a zero discount rate. (Omit the "$" sign in your response.) Net present value Project E $ Project H $
(b) Determine the net present value of the projects based on a 11 percent discount rate. (Round "PV Factors" to 3 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Net present value Project E $ Project H $
(d) If the two projects are not mutually exclusive, what would your acceptance or rejection decision be if the cost of capital (discount rate) is 8 percent? (Use the net present value profile for your decision; no actual numbers are necessary.) Project E Project H Both H and E
