Calculation of net present value with given cash flow

Assignment Help Finance Basics
Reference no: EM1313234

Calculation of net present value with given cash flow and probability

A firm's weighted average cost of capital is 10% and has a $4000 project with the following estimates of cash flows under three possible states of nature. The project can be liquidated in year 2 at a cost of $400 in all three states of nature. Should the company undertake the project? If a real option exists, determine its value. Support your conclusion quantitatively.

Reference no: EM1313234

Questions Cloud

Expalining the axial musculature: : Which of following are true of axial musculature:It arises elsewhere, however inserts on the axial skeleton. It makes up 40 percent of the body musculature.
Share of gdp is composed of consumption : Illustrate what share of GDP is composed of consumption. Illustrate what share of GDP is composed of investment.
Evaluation of current price per share : Evaluation of Current price per share and Supernormal Growth Dividend
What is the distance between town and john : Two crates, of mass 75.0 kg and 109 kg, are in contact and at rest on a horizontal surface. A 732 N force is exerted on the 75.0 kg crate. What is the force the each crate exerts on the other.
Calculation of net present value with given cash flow : Calculation of net present value with given cash flow and probability and Should the company undertake the project
Equilibrium wage is higher or lower than two : Do wages clear when the wage equals two. Do we know whether the equilibrium wage is higher or lower than two.
Result of regression and estimating demand function : From the regression output, estimate the demand function when income is $40,000 and price is $2 per gallon. Explain the result in terms of R-square, T-test, F-statistic, and signs of each X variables.
Find rex''s direct materials price variance : Compute the Variance analysis of direct Materials - Find Rex's direct materials price variance
Posterior group of axial muscles : Which of the following is the most posterior group of axial muscles? Muscles of the shoulder girdle. Muscles of the head and neck. Muscles of the pelvic floor

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Is it true that an option can never sell for lessthan

is it true that an option can never sell for lessthan you can make by exercising the option

  Computing tax incidences for seller and buyer

Compute deadweight loss from this $1 per unit tax and how much tax revenue government will get from tax. In determining tax incidence burden, compute tax incidences for both seller and buyer and sketch graph.

  The weighted average cost of capital

Assume perfect market conditions; that is, no taxes, transaction costs, information or bankruptcy costs, etc. Consider two firms U and L that are identical in every way but in the way they are financed.

  Calculation of a proposal to buy a new milling machine

Calculation of a proposal to buy a new milling machine using NPV and What is the net cost of the machine for capital budgeting purposes

  Calculating real rate using nominal rate and inflation rate

Assume nominal rate is 14.62% and inflation rate is 5.49%. Solve for the real rate.

  Computational fluid dynamics

Question on  Computational Fluid Dynamics,    What do your simulations derive the drag coefficients to be? Explain any discrepancies as best as you can.

  Calculation of expected return and beta

Calculation of expected return, beta, coefficient of variation, standard deviation and required rate of return

  Computation of base case npv and abandonment option

Computation of Base Case NPV and abandonment option of a Project

  Creating balance sheet using mark-to-market method

Applying the Mark-to-market method, what will Novi Company show on its balance sheet at the end of 2006 to reflect its investment in Troy Company?

  Computation of future contract value

Computation of future contract value and what is the farmer's net proceeds when corn is sold

  Computing the interest earned for next years

Computing the interest earned for next years wants to invest equally amounts at the end of each year

  Subsidiary corporation as well as calculation of income

Sale of Machinery to Subsidiary Corporation as well as Calculation of Income in Acquired Company

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