Does the project make sense at a discount rate

Assignment Help Financial Management

Reference no: EM131022536

Suppose a project costs 200,000 today, 100,000 next year and 15000 to dispose of it in ten years when the project is discontinued. Once finished three years from today, it is expected to generate a net income of 40000 per year until it is discontinued. Does the project make sense at a discount rate of 2%?

Reference no: EM131022536

Questions Cloud

What would total recruiting cost be for chester next year : Chester's turnover rate for this year is 6.29%. This rate is projected to remain the same next year and no further downsizing will occur from automating. Chester plans to spend an additional $500 beyond the extra amount above the $1000 recruiting bas..

When computing the net present value of a capital project : Which one of these is a requirement when computing the net present value of a capital project?

Used when evaluating the addition of the lower-priced shoes : Walks Softly sells customized shoes. Currently, it sells 16,000 pairs of shoes annually at an average price of $68 a pair. The company is considering adding a lower-priced line of shoes that will sell for $39 a pair. Walks Softly estimates it can sel..

What were flotation costs as fraction of funds raised : Moonscape has just completed an initial public offering. The firm sold 4 million shares at an offer price of $10 per share. The underwriting spread was $.60 a share. The price of the stock closed at $14 per share at the end of the first day of tradin..

Does the project make sense at a discount rate : Suppose a project costs 200,000 today, 100,000 next year and 15000 to dispose of it in ten years when the project is discontinued. Once finished three years from today, it is expected to generate a net income of 40000 per year until it is discontinue..

The warehouse is debt-free : Wexter's purchased a warehouse for $499,000 six years ago. Four years ago, repairs costing $132,000 were made to the building. The annual property taxes are $41,000. The warehouse has a current book value of $268,000 and a market value of $529,000. T..

What is the net benefit of a project to remove the dam : There is a proposal to remove a hydro dam in the state of Washington. The cost to the government of removing is the loss of $5,000,000 per year in profits from the sale of electricity for the next seven years. If the dam is removed, the salmon fisher..

What is the current yield on bond-value or cost of the bond : A bond has a coupon rate of 5.375%, pays coupons semiannually, and has a maturity of 5 years. If the yield to maturity is 5.80%, calculate the current cost of a bond with a par value of $1000. What is the current yield on the bond? Assume that one ye..

What is the beta of your portfolio : You own 500 shares of Stock A at a price of $70 per share, 485 shares of Stock B at $90 per share, and 850 shares of Stock C at $43 per share. The betas for the stocks are .6, 1.4, and .8, respectively. What is the beta of your portfolio?

User Account

All Pages