PLEASE RESPONSE ALL QUESTIONS AND SHOW HOW YOU DID IT THANK

PLEASE RESPONSE ALL QUESTIONS AND SHOW HOW YOU DID IT.

THANK YOU THANK YOU

7. A project that will last for 7 years is expected to have equal annual cash flows of $97,600. If the required return is 7.5 percent, what maximum initial investment would make the project acceptable? $857.642.61 $427,57812 $499,566.92 $458,119.41 O $516,948.29

Solution

7

Present value of future cash flows is the acceptable amount of investment.

Correct option - 5,16,948.29

8

Depreciation = asset base * depreciation rate in year 2 = 2,100,000 * 44.45% = 933,450

Correct option is - 933,450

9

During three years total depreciation charges = 33.33%+44.45%+14.81% = 92.59% of the asset base. Asset base remaining is 1-92.59% = 7.41% of the asset. Book value = 3250000 * 7.41% = 240,825

correct option is- 240,825

10

correct option - 12800

*Hope the above explanation helps, please comment if further explanation is required. Your rating is appreciated*

a	Present value of annuity=	P* [ [1- (1+r)-n ]/r ]
P=	Periodic payment	97,600
r=	Rate of interest per period
	Annual interest	7.50%
	Number of interest payments per year	1
	Interest rate per period	0.075/1=
	Interest rate per period	7.500%
n=	number of periods:
	Number of years	7
	Periods per year	1
	number of periods	7
	Present value of annuity=	97600* [ (1- (1+0.075)^-7)/0.075 ]
	Present value of annuity=	5,16,948.29