+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
Keller Cosmetics maintains an operating profit margin of 8.55% and a sales-to-assets ratio of 3.00. It has assets of $610,000 and equity of $410,000. Interest payments are $41
A company has a target capital structure that consists of 40 percent debt and 60 percent equity. The company's capital budget for next year is $10 million. The company expects
Suppose a customer's house increased in value over five years from $ 150,000 to $ 250,000. What was the annual growth rate of the property value during this five-year interval
Is there a difference in the variation of the yields of different types of investments? The file contains the yields for one-year certificates of deposit (CDs) and five-year C
A $1,000 par value bond with five years left to maturity pays an interest payment semiannually with a 5 percent coupon rate and is priced to have a 4.4 percent yield to maturi
The current price of gold is $1,600 per troy ounce. There are no storage costs. The risk free rate of interest is 5% continuously compounded. What is the forward price of gold
Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.43 million. The fixed asset falls into the three-year MAC
Cindy's Crafts had beginning retained earnings of $51,200. During the year, the company reported sales of $112,400, costs of $75,800, depreciation of $9,100, dividends of $1,5