User Account

All Pages

What is the payback period for project

Assignment Help Finance Basics
Reference no: EM131318283

G- Value company is considering two investments, both of which costs $20,000. The firm's cost of capital is 15 percent (%). The cash flows are as follows:

YEAR

PROJECT A

PROJECT B

1

12,000

10,000

2

8,000

6,000

3

6,000

16,000

REQUIRED: (SHOW ALL WORKINGS)

  • What is the payback period for each project? Which project would you accept based on the payback period and why?
  • What is the discounted payback for each period? Which project would you accept based on the discounted payback criterion and why?
  • Calculate the NPV of each project? Which project would you choose based on the NPV criterion and why?
  • Based on the IRR criteria which project would you choose if they were mutually exclusive? (SHOW ALL WORKINGS)

Johnson Brothers Ltd; has bonds outstanding that matures in 7 years and pays a 6 percent (%) semi-annual coupon.

What will the bond price be for one of these bonds if the par value is $1,000 and the market interest rate is 8.0 percent (%) Calculate and explain what would happen to the value of the bond if the market interest rate falls from 8.0 percent (%) to 6.0 percent (%) What is the YTM?List the key features of a bond.

Explain what is meant by net proceeds in the context of a bond sale. Provide an example.

Reference no: EM131318283

Questions Cloud

Comment on the data reviewed for each individual company : Comment on the data reviewed for each individual company for 2010 and 2009.- Based on the above, which firm would you select?
Estimate the mass transfer coefficient : Determine whether increasing the diameter of the glucose sphere or increasing the velocity of the water stream effects the magnitude of the mass transfer coefficient, kc. Which of these variables has the larger effect on the coefficient?
List the key features of a bond : What is the YTM? List the key features of a bond. Explain what is meant by net proceeds in the context of a bond sale. Provide an example.
How you will incorporate any changes into your books : How you will incorporate any changes into your books and records. Prepare a pro forma balance sheet and income statement providing the assumptions made and support the valuations assigned.
What is the payback period for project : What is the payback period for each project? Which project would you accept based on the payback period and why? What is the discounted payback for each period? Which project would you accept based on the discounted payback criterion and why?
Summarize the changes to the accounts for cash inflows : If a firm presents an income statement and a balance sheet, why is it necessary that a statement of cash flows also be presented?
State what assumptions must be made to obtain it : As discussed in section 30.1, the value of 2 can be derived theoretically by considering the molecular diffusion from a sphere into a large volume of stagnant fluid. Prove this is the correct value and state what assumptions must be made to obtain..
Complete the steps in developing the statement of cash flows : There are two principal methods of presenting cash flow from operating activities-the direct method and the indirect method. Describe these two methods.
Interest rate on money market investments : Using the Baumol model, how much of current cash holdings should be retained and how much should be invested in the money markets. After the initial investment in securities, how many times during the next 12 months will the firm have to sell secu..

Reviews

Write a Review

Finance Basics Questions & Answers

  How sensitive is the acquisition value to these estimates

A major concern in any DCF valuation is the accuracy of both the terminal (long-term) growth rate and discount rate estimates. How sensitive is the acquisition value to these estimates?

  Major determinants of the average daily expenditure

The manager of a Barrier Reef resort wished to know the major determinants of the average daily expenditure by tourists (measured in dollars). From interviews with 18 tourists who have stayed at Great Barrier Reef holiday resorts,

  When does a derivative security qualify for hedge

when does a derivative security qualify for hedge accounting under sfas

  What is the expected capital gains yield

The next dividend payment by Wyatt, Inc., will be $3.40 per share. The dividends are anticipated to maintain a growth rate of 7.75 percent, forever. Assume the stock currently sells for $50.40 per share.

  Forecast the amount of funds

Explain how the AFN equation can be used to forecast the amount of funds that will be needed over a several year period.

  What is the firms debt-equity ratio

Central Systems, Inc. has a weighted average cost of capital of 8 percent. The firm has an after-tax cost of debt of 5 percent and a cost of equity of 10 percent. What is the firm's debt-equity ratio?

  What questions would you change or drop

What might you do differently? What questions would you change or drop? What questions might you add? How might this tracking survey differ from those used for other products?

  What is the degree of operating leverage

The accounting manager of Gateway Inns has noted that every time the inn's average occupancy rate increases by 3 percent, the operating cash flow increases by 7.11. What is the degree of operating leverage if the contribution margin per unit is 4?

  What is the annual percentage rate apr if interest is paid

annual percentage rate apr. suppose that a company borrows 20000 for 1 year at a stated rate of interest of 9 percent.

  Prepare a ratio analysis of fedex 2006 and 2007 year end

Prepare a ratio analysis of FedEx's 2006 and 2007 year-end results?

  What is a bond indenture?

What is a bond indenture?

  Further it has 10000 of operating long term assets and an

myg reported 7500 of operating current assets and 1750 of operating current liabilities. further it has 10000 of

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd