Project using the irr method

Assignment Help Finance Basics
Reference no: EM132185273

Fun Inc.'s corporate tax rate is 35%. It has 4,000 coupon paying bond outstanding with $1,000 per value, 20-year maturity, and a coupon rate of 7%. The bonds are currently selling for 103% of the par value. The bonds make semi-annual interest payments. Fun Inc. also has 90,000 common shares outstanding, selling for $57 per share. The firm has a market beta of 1.10. Market risk premium is currently 8% and risk-free rate is 6%. The firm is considering a project. This project requires an initial investment of $11.5 million and promises to yield annual earnings of $1.4 million perpetually. Determine whether the firm should take the project using the IRR method. Please show all necessary computation including the WACC and make your conclusion.

Reference no: EM132185273

Questions Cloud

Calculate the intrinsic value of lava development shares : Lava Development Company has maintained stable earnings of $7 per share, Calculate the intrinsic value of Lava Development shares
What is the price of builtrite stock : Reading a stock quote, you see that builtrite pays a $2.50 dividend and has a PE of 16. you also note that builittite pays out one quarter of its earning
What from your problem do you have control over : What from your problem do you have control over and what do you have no control over? Explain your analysis/answer in seven (7) or more sentences.
What rate of return would they be earning : They? don't have the slightest idea what return they would be making on their investment of $17,605.94. What rate of return would they be earning?
Project using the irr method : Determine whether the firm should take the project using the IRR method. Please show all necessary computation including the WACC and make your conclusion.
Effective canadian dollar per yen cross-rate : What would be the effective Canadian dollar per yen cross-rate, C$/Y, quotation?
Prepare a paper on american government : Prepare a paper on some subject relevant to American Government. term paper must be no less than 1500 words in length. Points will be deducted for misspellings.
Explain the use of current technologies : Explain the use of current technologies to both carry out and fight cybercrime. In addition, explain the technological, cultural, and political influences.
Compute the capital structure weights and the firm : The risk free rate is 6%, the MRP is 8%, and the stock's beta is 1.2. The tax rate is 25%. Compute the capital structure weights and the firm's WACC.

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Incorporated risk management into strategic plan

Based upon your professional experience or a recent event, provide an example of how an organization successfully or unsuccessfully

  Calculate how long it would take to pay off the credit card

Calculate how long it would take to pay off the credit card balance paying only the minimum payment. Choose an amount of time between 2 and 10 years and calculate the monthly payment required to pay off the credit card balance in that amount of tim..

  Evaluate drk’s dividend reinvestment plan

Evaluate DRK's dividend reinvestment plan. Will it increase shareholder wealth? Discuss the advantages and disadvantages involved here.

  Determine the risks and cost considerations

Lear, Corporation, has $800,000 in current assets, $350,000 of which are permanent current assets. In addition, the firm has $600,000 invested in fixed assets.

  Petersen securities recently issued convertible bonds

Petersen Securities recently issued convertible bonds with a $988 par value. The bonds have a conversion price of $38 per share.

  List the ways a companys financial manager can benchmark

list the ways a companys financial manager can benchmark the companys own

  What would be the monthly payment

If the dealer is offering 100% financing at 7.6% APR compounded monthly for a 5 year loan, what would be the monthly payment?

  Is it likely to improve social welfare

Recently. The California Insurance Commissioner proposed a regulation that would reduce the ability of insurers to use geographic location in determining.

  What is the project mirr

What is the project's MIRR? Round your answer to two decimal places. Do not round your intermediate calculations.

  Discuss the importance of commercial paper

Discuss the importance of commercial paper and its importance to a corporation. What is this used instead of short term borrow by a company.

  The national hockey league are two-time defending stanley

The Edmonton Oilers (Canada) of the National Hockey League are two-time defending Stanley Cup champions.

  Describe the exact nature of the dubai sukuk

Describe the exact nature of the Dubai Sukuk, What Islamic modes of finance underpin the Dubai Sukuk? Describe how these modes of finance work and the exact relationship they have with the Dubai Sukuk

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