Using the appropriate cost per capital to find NPV and IRR

Assignment Help Financial Management
Reference no: EM131070849

Using the appropriate cost per capital to find the NPV and IRR for a project that has $100,000 initial investment if done in-house, cash flows of $27,000 per year for five years a risk premium of 3% .Your cost of capital is 7.0% if your capital spending is less than $700,000. It goes up to 8.0% if you exceed that $700,000 threshold

Reference no: EM131070849

Questions Cloud

Segmented income statement as evaluation tool : Which of the following responsibility centers will use a segmented income statement as an evaluation tool? Which of the following statements follows from the controllability principle?
Saving to put into the retirement fund : Tom and Elaine Douglas decide to start a college retirement fund. They expect that the total amount of money needed for their retirement is $800,000 in 25 years. Assume that they feel comfortable of an 8% annual investment return. How much do they ha..
Assuming zero movement in the market : Surfs Up Inc. announced a $1.50 per share dividend with an ex-date of May 15. If the closing price of Surfs Up Inc.'s stock was $35 on May 14. What would we expect the price to be on the close of the 15th, assuming zero movement in the market?
Discuss the different participants in the markets : Discuss the different types of notes, bills, and bonds that are sold in the U.S. Treasury market. Discuss the different participants in the markets. Discuss how arbitrage opportunities affect the different market participants and the types of interes..
Using the appropriate cost per capital to find NPV and IRR : Using the appropriate cost per capital to find the NPV and IRR for a project that has $100,000 initial investment if done in-house, cash flows of $27,000 per year for five years a risk premium of 3% .Your cost of capital is 7.0% if your capital spend..
Annual cash flows-required return : A project that provides annual cash flows of $1,930 for 8 years costs $7,700 today. Requirement 1: At a required return of 8 percent, what is the NPV of the project? At a required return of 24 percent, what is the NPV of the project?
Firms external borrowing opportunities-euro borrowing : A is a U.S.-based MNC with AAA credit; B is an Italian firm with AAA credit. Firm A wants to borrow €1,000,000 for one year and B wants to borrow $2,000,000 for one year. The firms external borrowing opportunities are: Euro borrowing | USD Borrowing...
Borrowed at the annual effective interest rate : To purchase a house, $100,000 is borrowed at the annual effective interest rate i. The loan will be repaid by payments at the end of each month for 30 years. The monthly payments within each year are constant, but the monthly payments increase by $10..
What is the sensitivity of the NPV to the price and quantity : McGilla Golf is evaluating a new golf club. The clubs will sell for $770 per set and have a variable cost of $370 per set. The company has spent $147,000 for a marketing study that determined the company will sell 59,000 sets per year for seven years..

Reviews

Write a Review

Financial Management Questions & Answers

  Calculating total cash flows

Calculating Total Cash Flows Volbeat Corp. shows the following information on its 2015 Income Statement: Sales $267,000; Costs $148,000; other expenses $8,200; depreciation $17,600; interest expense $12,400; taxes $32,600. What is the Operating Cash ..

  What will your monthly payments and EAR be

You want to buy a new sports coupe for $74,900, and the finance office at the dealership has quoted you a loan with an APR of 7.3 percent for 36 months to buy the car. What will your monthly payments and EAR be?

  What is the target stock price in one year

Fly Away, Inc., has balance sheet equity of $6.9 million. At the same time, the income statement shows net income of $855,600. The company paid dividends of $419,244 and has 120,000 shares of stock outstanding. If the benchmark PE ratio is 33, what i..

  What is the value of the firm

Consider a firm with EBIT of $125,000, debt of $500,000. If the rd is 12%, the rsU= 16% and the corporate tax rate is 40%, then what is the value of the firm (VL) according to MM with corporate taxes? $475,875 $528,750 $587,500 $668,750 $710,875

  Considering change in its capital structure

Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2 million shares outstanding. What are BEA’s total value..

  What is the annual percentage rate on the loan

Assume that you deposit $700 every three months at 6% annual rate, compounded quarterly. How much will you have at the end of 20 years? You borrow a five year $13,000 loan with monthly payments of $250. What is the annual percentage rate (APR) on the..

  What is the ear and apr on this loan

You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 33-year mortgage loan for 75 percent of the $3,330,000 purchase price. The monthly payment on this loan will be $16,600. What is the APR on this loan? What is the..

  How much interest will he pay over the life of the loan

Larry Davis borrows $74,000 at 10 percent interest toward the purchase of a home. His mortgage is for 20 years. Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. How much sho..

  The fixed asset falls into the three-year MACRS class

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.58 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,040,000 in annual sale..

  Market-to-book ratio

Blue Dog Manufacturing Corp.’s stock is trading at $39.75, and the company reports its common equity value as $31,646,400. What is Blue Dog Manufacturing Corp.’s market-to-book(M/B) ratio?

  What is the sensitivity of the NPV to the price and quantity

McGilla Golf is evaluating a new golf club. The clubs will sell for $875 per set and have a variable cost of $430 per set. The company has spent $150,000 for a marketing study that determined the company will sell 60,000 sets per year for seven years..

  What should be current stock price

Ranyard's beta is 1.13, and the last dividend per share paid was $4.21. The market risk premium is estimated to be 7.56%, and the real rate of interest is 2.04%. The liquidity risk premium is 0.7%. Analysts expect the company to grow at a rate of 3.5..

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