Clculate net present value do not include the dollar sign

Reference no: EM13621092

Blue Angel, Inc., a private firm in the holiday gift industry, is considering a new project. The company currently has a target debt-equity ratio of .48, but the industry target debt-equity ratio is .38 The industry average beta is 1.1. The market risk premium is 8 percent, and the risk-free rate is 5.7 percent. Assume all companies in this industry can issue debt at the risk-free rate. The corporate tax rate is 55 percent. The project requires an initial outlay of $485,000 and is expected to result in a $90,000 cash inflow at the end of the first year. The project will be financed at Blue Angel's target debt-equity ratio. Annual cash flows from the project will grow at a constant rate of 5.7 percent until the end of the fifth year and remain constant forever thereafter.

Required:

(a) Calculate net present value. (Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

Reference no: EM13621092

Questions Cloud

You are a mortgage banker at bbampt bank in miami one : you are a mortgage banker at bbampt bank in miami. one customer peter wants to borrow money from your bank to finance

You purchased an investment which will pay you 8000 in real : you purchased an investment which will pay you 8000 in real dollars a year for the next three years. each payment will

A turbine blade 63 cm long with cross sectional area : a turbine blade 6.3 cm long with cross sectional area 4.6x10-4m2 and perimeter 0.12 m is made of stainless steel k18

Statistics students were asked to fill a one-cup measure : statistics students were asked to fill a one-cup measure with raisin bran then tap the cup lightly on the counter three

Clculate net present value do not include the dollar sign : blue angel inc. a private firm in the holiday gift industry is considering a new project. the company currently has a

How many shares will be repurchased what is the value of : seger inc. is an unlevered firm with expected annual earnings before taxes of 30 million in perpetuity. the current

Your coworker just heard that senior management had : your coworker just heard that senior management had rejected the departments latest proposed project. although the net

Hartzell inc had the following data for 2010 in millions : hartzell inc. had the following data for 2010 in millions net income 600 after-tax operating income ebit 1-t 700 and

Rhps compnay is considering the purchase of a new machine : rhps compnay is considering the purchase of a new machine. the new machine falls into the macrs 7-year class has an

User Account

All Pages