What is his projects irr

Assignment Help Financial Management
Reference no: EM131328648

A certain project has the following stream of cash flows:

Year

Cash flow

0

$ 17,500

1

-80,500

2

138,425

3

-105,455

4

30,030

a. Fill in the following table:-

Cost of Capital (%)

Project NPV

0

-

5

-

10

-

15

-

20

-

25

-

30

-

35

-

50

-

b. Use the values developed in part (a) to draw an NPV profile for the project.

c. What is his project's IRR?

d. Describe the conditions under which the firm should accept this project.

Reference no: EM131328648

Questions Cloud

Trying to evaluate generation project : Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 –$ 37,000,000 1 55,500,000 2 – 12,000,000 a. If the company requires a return of 8 percent on its investments, what is the NPV of the p..
The black bird company plans an expansion : The Black Bird Company plans an expansion. The expansion is to be financed by selling $52 million in new debt and $124 million in new common stock. The before-tax required rate of return on debt is 10.73% percent and the required rate of return on eq..
Black-scholes option pricing model-what is value of option : Lissa Co.'s stock price is currently $30.25. A 6-month call option on Lissa.'s stock has a strike price of $25 and has an expected volatility of 40% (i.e., expected standard deviation = 40%). The risk-free rate is 6%. According to the Black-Scholes o..
Describe the components for the chi square formula : The overall predicted portion of Y score variability is measured by r squared. SS regression is the denominator in the F-ratio inference test for regression.SS residual is the numerator in the F-ratio inference test for regression.No correlation betw..
What is his projects irr : Use the values developed in part (a) to draw an NPV profile for the project.- What is his project's IRR?- Describe the conditions under which the firm should accept this project.
Characteristic of a family system : Family structure involves different roles and relationships. The basic characteristic of a family system includes: internal and external boundaries, rules with other family members, family organization, distribution of power among the family membe..
Discuss how poverty negatively impacts development : Poverty has a great impact on development. Discuss how poverty negatively impacts development across the lifespan (infancy, childhood, adolescence, adulthood). Be sure to address how it impacts physical, cognitive, and socioemotional development.
How many cells of the board contain a segment of the circle : A circle, 2n - 1 units in diameter, has been drawn symmetrically on a 2n × 2n chessboard, illustrated here for n = 3
Define actual and perceived independence : HI6026- Define actual and perceived independence, and explain the importance of each. Would King & Queen be liable to EFL? Provide specific case references to support your answer.

Reviews

Write a Review

Financial Management Questions & Answers

  What will be the price of the stock on the ex-dividend date

The Mann Company belongs to a risk class for which the appropriate discount rate is 13 percent. Mann currently has 228,000 outstanding shares selling at $126 each. What will be the price of the stock on the ex-dividend date if the dividend is declare..

  What is the net present value of a project with cash flows

What is the net present value of a project with the following cash flows if the discount rate is 15%?

  Calculate families share of earnings

Juan, married and a father of 4 is 45 and expects to work until 65. he earns 70,000$ a year and expects an increase annually of 5%. Juan expects inflation to be 4% over his working life. His personal consumption is earl to 10% after tax earning and h..

  What is the IRR on this branch expansion

Modern Federal Bank is setting up a brand new branch. The cost of the project will be $1.2 million. The branch will create additional cash flows of $235,000; $412,300; $665,000, and $875,000 in years 1-4 respectively. The firm’s cost of capital is 12..

  How much would you still owe at the end of the first year

Suppose you borrowed $17,500 at a rate of 6.25% and must repay it in 5 equal payments at the end of each of the next 5 years. How much would you still owe at the end of the first year, after you have made the first payment?

  What is the current worth of the bond

Interest accumulates and is paid at the time the bond is redeemed. You are now 27 years old. What is the current worth of the bond (principal plus interest)?

  The beta of a stock is measured by the

The beta of a stock is measured by the

  What is the risk-free interest rate

You buy a share of stock, write a 1-year call option with strike price X = $100 and buya 1-year put option with strike price X = $100. The net outlay required to establish this portfolio is $97. The stock pays no dividends. What is the risk-free i..

  Determine the time period five cash flow

You are considering a cost reduction project for your business. The project will require investment of $1,500,000 in new equipment as an addition to existing equipment. The equipment has shipping and handling charges of $15,000 and will be installed ..

  Risk-free rate have to be for the two stocks

Stock Y has a beta of 1.8 and an expected return of 18.2 percent. Stock Z has a beta of 0.8 and an expected return of 9.6 percent. What would the risk-free rate have to be for the two stocks to be correctly priced?

  Calculate the profit or loss for each trading day

You are long 10 gold futures contracts, established at an initial settle price of $1,610 per ounce, where each contract represents 100 ounces. Over the subsequent four trading days, gold settles at $1,617, $1,607, $1,616, and $1,625, respectively. Ca..

  Calculate amount of fund that will be freed up by new projet

An Italian company is considering expanding the sales of its cappuccino machines to the U.S. market. As a result, the idea of setting up a manufacturing facility in the U.S. should be explored. Calculate the PV of interest tax shield from non-concess..

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