NPV is used for when providing a partial decisions rules

Assignment Help Financial Management
Reference no: EM131020560

"NPV is used for when providing a partial decisions rules for mangers seeking to create shareholders value and also a target rate of return."

Can you think of an example where NPV would give you a target rate of return? How would you translate a dollar amount to a rate of return?

Reference no: EM131020560

Questions Cloud

Calculate the price elasticity of demand for each bridge : Calculate the price elasticity of demand for each bridge, using the midpoint formula. How much total revenue did the commission collect from these bridges in November? How much did it collect in December? Relate your answer to your answer in (a).
Dividends are expected to grow at rates : Tin-Tin Waste Management, Inc., is growing rapidly. Dividends are expected to grow at rates of 30 percent, 35 percent, 25 percent, and 18 percent over the next four years. Thereafter, management expects dividends to grow at a constant rate of 7 perce..
Calculate the weighted average cost of capital-common equity : Given the following information calculate the weighted average cost of capital for Hamilton corp. line up the calculations in the order shown i table 11-1. Debt..35% preferred stock..20 common equity.. 45 additional information bond coupon rate..11% ..
How should the strategic factors be assessed : Cash was particularly limited this year and acceptance of this project could mean that other projects would have to be deferred. How should this be taken into consideration?
NPV is used for when providing a partial decisions rules : "NPV is used for when providing a partial decisions rules for mangers seeking to create shareholders value and also a target rate of return." Can you think of an example where NPV would give you a target rate of return? How would you translate a doll..
Forecasting internal and external finds is critical : The five steps in financial planning, forecasting internal/external finds is critical. With today's economic and interest rate market conditions, along with the volatility of the capital markets, what factors would you emphasize when you are preparin..
What is market value for government bonds : Bonds pay semiannual interest of $ 75. They mature in 10 years and have a par value of $1000. The market rate of interest is 7 %. What is the market value for the Government bonds? Lipbalm issued 10 - year bonds 2 years ago at a coupon rate of 8 perc..
How the process of interest rate determination affected : Select at least two additional economic indicators such as inflation, unemployment rates, retail sales and the yield curve to make and explain your prediction.
Coupon bonds on the market with five years : Tiango. has 9 percent coupon bonds on the market with five (5 ) years left until maturity. These bonds make annual payments. If the yield to maturity on t he bond is 8 percent, what is the current price of the bond? What would be the pr ice of the bo..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the equivalent annual cost of an oven

Champion Bakers uses specialized ovens to bake its bread. One oven costs $850,000 and lasts about 3 years before it needs to be replaced. The annual operating cost per oven is $10,000. What is the equivalent annual cost of an oven if the required rat..

  Using semi-annual compounding

Using semi-annual compounding, what is the price of a 5 percent coupon bond with 10 years left to maturity and a market interest rate of 7.2 percent? Assume that interest payments are paid semi-annually and that par value is $1000.

  Depreciation is one of our biggest operating cash inflows

A business executive once stated, “Depreciation is one of our biggest operating cash inflows.” Do you agree? Explain.

  A project that provides a constant annual cash flow

A project that provides a constant annual cash flow of $1,930 for eight years costs $7,700 today. Calculate the NPV at an 8% discount rate. Note: NPV = sum of the present values of all (positive and negative) cash flows

  Risk-free rate-market risk premium

Stock Y has a beta of 1.35 and an expected return of 15 percent. Stock Z has a beta of 0.8 and an expected return of 11.8 percent. If the risk-free rate is 5.3 percent and the market risk premium is 7.8 percent, are these stocks correctly priced?

  Which investment should firm choose if cost of capital

Consider the following projects, X and Y where the firm can only choose one. Project X costs $600 and has cash flows of $400 in each of the next 2 years. Project Y also costs $600, and generates cash flows of $500 and $275 for the next 2 years, respe..

  Un-systematic Risk and their relationship with CAPM

Explain the ideas of Systematic, Un-systematic Risk and their relationship with CAPM. What kind of portfolios will have their expected rates of returns (versus their “beta’s”) located on the Security Market Line?

  What is the value of the premium

Among a company’s assets and accounting records, an actuary finds a 10-year bond that was purchased at a premium. What is the value of the premium?

  How much is the stock currently worth

Netscrape Communications does not currently pay a dividend. You expect the company to begin paying a $4.2 per share dividend in 10 years, and you expect dividends to grow perpetually at 5.7 percent per year thereafter. If the discount rate is 13 perc..

  Change in depreciation affect net income in current year

Assume you work as an assistant accountant in the head office of a national movie rental business, a la Blockbuster Inc. With the increasing popularity of online movie rental operations, your company has struggled to meet its earnings targets for the..

  What was the return of the stock market that day

On November 27, 2007, The Dow Jones Industrial Average closed at 12,958.44, which was up 215.04 that day. What was the return (in percent) of the stock market that day?

  What will be the balance on the account after eight deposits

You deposit today $600 dollars in an account that pays 1.4 percent per year. For the next few years you will keep making deposits 5.1 percent larger than the previous one. What will be the balance on the account after 8 deposits?

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