+1-415-670-9189
info@expertsmind.com
New project available that requires an initial investment
Course:- Financial Management
Reference No.:- EM13942975




Assignment Help
Assignment Help >> Financial Management

Stackhouse Industries has a new project available that requires an initial investment of $5.9 million. The project will provide unlevered cash flows of $815,000 per year for the next 20 years. The company will finance the project with a debt-to-value ratio of .45. The company’s bonds have a YTM of 6 percent. The companies with operations comparable to this project have unlevered betas of 1.29, 1.22, 1.44, and 1.39. The risk-free rate is 3 percent, and the market risk premium is 6.2 percent. The company has a tax rate of 35 percent.

What is the NPV of this project?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Toys R Us can purchase mechanisms to be used in making certain toys for $60 each. They can manufacture their own mechanisms for $7000 per year fixed cost plus $35 for each mec
Titan Mining Corporation has 9 million shares of common stock outstanding, ½ million shares of preferred stock paying $7 dividends and 120,000 8.5% semiannual bonds outstandin
Robert Campbell and Carol Morris are senior vice-presidents of the Mutual of Chicago Insurance Company. They are co-directors of the company’s pension fund management division
Why are the risks involved in international credit management more complex than those associated with purely domestic credit sales? What examples can you provide from financia
Suppose that you own IBM preferred stock that pays an annual, fixed, and perpetual dividend of $10 which is worth $100 per share. The market return is 12% and the risk-free ra
You want to buy a Honda Accord that costs you $20,000. But you have only $5,000 cash, so you need to borrow $15,000 from the Fairfax Honda dealer. The dealer tells you the int
Assume Meyer Corporation is 100 percent equity financed. Calculate the return on equity, given the following information: (1) Earnings before taxes = $1,500; (2) Sales = $5,00
The December 31, 2015, balance sheet of Schism, Inc., showed long-term debt of $1,460,000, $152,000 in the common stock account, and $2,770,000 in the additional paid-in surpl