By how much did the change in wacc affect projects npv

Assignment Help Financial Econometrics
Reference no: EM13335504

The Seattle Corporation has been presented with an investment opportunity which will yield end-of-year cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. What is the NPV for this investment? Now assume the Federal Reserve takes actions which increases interest rates and therefore impacts the firm's WACC. If the new WACC for Seattle Corporation becomes 14 percent By how much did the change in the WACC affect the project's forecasted NPV? That is, find the ?NPV resulting from the Federal Reserve actions.

Reference no: EM13335504

Questions Cloud

Calculate the weight of the heaviest bear : The density of ice is 917 kg/m3, and the density of sea water is 1025 kg/m3. What is the weight of the heaviest bear
Describe how you created the conceptual and process : Describe how you created the conceptual and process view for all four (4) diagrams. In the description, be sure to provide a justification for each key decision in the design.
Why might a profitable motel shut down in the long run if : Why might a profitable motel shut down in the long run if the land on which it is located becomes extremly valuable due to surrounding economic development?
Find the speed of the explosive at the max height : An explosive is fired from the ground at an angle of 53.1 degrees and a speed of 30 m/s. what is the speed of the explosive at the max height
By how much did the change in wacc affect projects npv : The Seattle Corporation has been presented with an investment opportunity which will yield end-of-year cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10.
What command-and-control policy might the landlord impose : Pedro loves playing rock music at high volumes. Mario loves opera and hates rock. Unfortunately, they are next door neighbors in an apartment building with paper thin walls.
Examine the effect of changes in the variable cost : Examine the effect of changes in the variable cost / fixed cost structure of the company on cost-volume analysis decisions by managers.
Suppose the economy has the following relationships in the : Suppose the Economy has the following relationships in the Goods Market?
Determine the original speed of the bullet : A 10.4-g bullet is fired into a stationary block of wood having mass m = 5.03 kg. determine the original speed of the bullet

Reviews

Write a Review

Financial Econometrics Questions & Answers

  How to show the companys equity after the issue

Book value of common stockholders' equity of Dow Chemical, December 31, 2010 (figure in billions). Common Shares ($1.5 par value per share) $2.939; Additioan paid in capital $2.294; retained earnings 17.744;

  Determine what is the new price per share of a firm

A firm has $75 million of assets that includes $12 million of cash and 25 million shares outstanding. If the firm uses $12 million of cash to repurchase shares, what is the new price per share

  Determine what is the yield on 2-year treasury securities

The real -risk-rate is 3%. Inflation is expected to be 2% this year and 4% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities

  Compute the maximum change in total deposits

Compute the maximum change in total deposits that would result if deposits at financial institutions were immediately increased by 120 billion and the reserve requirement was 5 percent.

  Find what is the amount of the dividend of the garden

The common stock of The Garden of Eden is selling for $42 a share. The company pays a constant annual dividend and has a total return of 5.8 percent. What is the amount of the dividend

  Determine what proceeds did sheffield company receive

On September 4, Sheffield Company discounted at Sunshine Bank a $9,000 (maturity value), 120-day note dated June 4. Sunshine's discount rate was 7.50%.

  Determine what are the prices of the bonds today

Bond X is a premium bond making annual payments. The bond has a coupon rate of 9.2 percent, a YTM of 7.2 percent, and has 17 years to maturity. Bond Y is a discount bond making annual payments.

  Compute the activity rates for each of the three activities

Prior to the activity-based costing study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month was $307,000 and that 15,000 diners had been served.

  Determine what is the annual ocf for the project

The company currently sells 2,070 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,890 units per year.

  How much total interest is paid over the life of the loan

Prepare an amortization schedule for a five-year loan of $60,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. How much interest is paid in the third year

  What is the contribution margin per procedure point

Assume that a specialty group has the following cost structure and that the group expects to perform 7,500 procedures in the coming year: Fixed costs $500,000 Variable Cost per procedure $25

  What capital budget could firm support without issuing stock

A corporation expects to have earnings available to common shareholders (net profits minus preferred dividends) of $1,000,000 in the coming year. The firm plans to pay 40 percent of earningss available in cash dividends.

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