Calculate the net present value of this project to company

Assignment Help Financial Econometrics
Reference no: EM13335228

Timo Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $144,980 and have an estimated useful life of 9 years. It believes it can sell the exhibit for $72,400 at that time. (Amusement parks need to rotate exhibits to keep people interested.) If the project sells the company will recoup all gains from the sale of the exhibit. It is expected to increase net annual cash flows by $27,900. The company's borrowing rate is 8%. Its cost of capital is 10%. Its tax rate is 20%. The exhibit will be depreciated using 5 year straight line depreciation with the half year convention. Calculate the net present value of this project to the company.

Reference no: EM13335228

Questions Cloud

What is general industries expected current share price : general industries is expected to generate $22 million, $26 million, $29 million, $30 million, and $32 million in free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 3% per year.
Find the minimum power rating of the car : An electric car accelerates for 11 s by drawing energy from its 270-V battery pack. Find the minimum power rating of the car
Determine what is the companys wacc of par : The first bond issue has a face value of $85 million, has a 7 percent coupon, and sells for 97 percent of par. The second issue has a face value of $50 million, has an 8 percent coupon, and sells for 108 percent of par.
Find the magnitude and size of the point charge : A conducting spherical shell with a total uniformly distributed charge of -4Q on the combination of inner and outer surfaces has a point charge at the center of the shell
Calculate the net present value of this project to company : Timo Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $144,980 and have an estimated useful life of 9 years. It believes it can sell the exhibit for $72,400 at that time.
Find an expression for the speed of the charge : V_A is the electric potential at point a. V_A ( V_B
What is the buoyant force on the diving bell : A diving bell has a weight of 100000 N when measured on shore. What is the buoyant force, FB, on the diving bell
Explain the calibration curve of absorbance vs. wavelength : How do I calculate the concentration (molarity) using the calibration curve of absorbance vs. wavelength
Describe the ongoing maintenance that will be required : Be typed, double-spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

Reviews

Write a Review

Financial Econometrics Questions & Answers

  What is the contribution margin per procedure point

Assume that a specialty group has the following cost structure and that the group expects to perform 7,500 procedures in the coming year: Fixed costs $500,000 Variable Cost per procedure $25

  Explain how to compute the cost of external equity-re

The expected dividend is $2.50 per share and the growth in dividends is 8%. If the flotation cost is 10% of the issue proceeds, compute the cost of external equity, re.

  How much do need to save at the end of each year

YOu want to retire in 30 years. You deposit $20,000 in the account now and plan to save an equal amount each year for the next 30 years. Once you retire, you will need $675,000. r=6%.

  What would the future value be for an annuity due

What's the future value of a 3%, 5-year ordinary annuity that pays $400 each year. If this was an annuity due, what would its future value be.

  What was the return f the stock market for march 14-2013

THe index closed at 14,539.14, which was up from the previous day's close of 14,455.28. What was the return (in percent to four decimal places) of the stock market for March 14, 2013

  Determine how much will have in 30 years compounded monthly

You plan to retire in 30 years and decide to save $10,000 per year. If the interest rate is 6% compounded monthly, how much will you have in 30 years. Assume that each deposit is made at the end of every year.

  Determine what is capitals after-tax wacc

If the returns required by investors are 10 percent, 13 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC. Assume that the firm's marginal tax rate is 40 percent.

  Describe which is the financial impact in current state

YXZ could sell these units in their current state for $100 each. It will cost YXZ $10 per unit to complete these units so that they can be sold for $135 each. when the incremental revenues and expenses are analyzed, which is the financial impact?

  How much interest is included in the first months payment

Consider a 30-year mortgage at an interest rate of 9% compounded monthly with a $1300 monthly payment. How much interest is included in the first month's payment

  Calculate the firms weighted average cost of capital

A company has determined that its optimal capital structure consists of 40 percent debt and 60 percent equity. Given the following information, calculate the firm's weighted average cost of capital.

  What is the current price of the bond in the united states

Suppose a German company issues a bond with a par value of 1000, 15 years to maturity, and a coupon rate of 7.7 percent paid annually. If the yield to maturity is 8.8 percent, what is the current price of the bond

  What is the maximum capital budget that can be adopted

Net income for the previous year was $10 million, and it is expected to increase by 10 percent this year. The firm expects to maintain its dividend payout ratio of 40 percent on the 1 million shares of common stock outstanding.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd