homework help > finance > finance q&a board > topic: finance ba ii +...

Q BgQuestion:

      
Rookie
Karma Points: 10
Respect (52%):
posted by  mbrabes on 10/21/2009 10:34:39 AM  |  status: Live  |  Earned Karma: 10

Finance BA II +

Course Textbook Chapter Problem Needs by
Financial Management Fundamentals of Financial Management, Concise Edition (12th) by Brigham, Houston 12 13 10/21/2009 at 9:00:00 AM
Question Details:
Aerospace Dynamics will invest $110,000 in a project that will produce the following cash flows.  The cost of capital is 11 percent.  Should project be undertaken?  I need to know how to do this step by step on the calculator...what do I enter?  (the fourth year's cash flow is negative).
YEAR                            CASH FLOW
                                                   1                                       $36,000
                                                   2                                         44,000
                                                   3                                         38,000
                                                   4                                        (44,000)
                                                   5                                          81,000

AAnswers:

Answer Question Ask for clarification
Mentor
Karma Points: 535
posted by adepu on 11/2/2009 12:43:19 PM  |  status: Live
Asker's Rating: Helpful   
Response Details:
discont all the cash flows for present period with the interest rate 11%.
If the current value is < $110,000 then the project shpuld not be undr taken.
otherwsie we can under take the project.
taking that we will get the cash flow art the end of the year.
PV=32432.43 + 35711.39 +27785.27- 28984.16 +48069.56
   
   = 115 014.49
so we can under take the project.
Answer Question Ask for clarificarion
Ask New Question

Join Cramster's Community

Cramster.com brings together students, educators and subject enthusiasts in an online study community. With around-the-clock expert help and a community of over 100,000 knowledgeable members, you can find the help you need, whenever you need it. Join for free today » How Cramster is different from tutoring »

Need Help In

Useful Links