Compare the wacc for the hong kong project with the wacc

Assignment Help Cost Accounting
Reference no: EM13882210

Historically, Hong Kong has imported over 95% of its fresh vegetables each day. In an effort to develop sustainable and renewable vegetable sources, a new commercial vertical crop technology is being installed through a public-private partnership with Valcent Products. 1 For Valcent Announces Agreement to Supply VerticropTM Vertical Farming Technology to Hong Kong's VF Innovations Ltd.," www.valcent.net, June 16, 2010 news release.

Illustration purposes, assume that the present worth of the total system cost is $20 million with financing sources and costs as follows.

Commercial loan for debt financing

$10 million at 6.8% per year

Retained earnings from partnering corporations

$4 million at 5.2% per year

Sale of stock (common and preferred)

$6 million at 5.9% per year

There are three existing international vertical farming projects with capitalization and WACC values as follows:

Project 1:

$5 million with WACC 1  7.9%

Project 2:

$30 million with WACC 2  10.2%

Project 3:

$7 million with WACC 3  4.8%

Compare the WACC for the Hong Kong (HK) project with the WACC of the existing projects.

Reference no: EM13882210

Questions Cloud

What broad conclusions can you draw from this example : A priori, would you expect expenditure on food to increase linearly as total expenditure increases regardless of the level of total expenditure? Why or why not? You can use total expenditure as a proxy for total income.
Prepares its financial statements : 1.Air France KLM (AF), a French company, prepares its financial statements according to International Financial Reporting Standards.
What is the net present value of sams business : Sam wants to start a small commercial bakery to supply gourmet deserts to local restaurants. He believes that with his product line and his connections in the restaurant business, he can grow the business over the next five years into a profitable ni..
Risk and return and coefficient of variation : Based on the following information, calculate the coefficient of variation and select the best investment based on the risk/reward relationship:
Compare the wacc for the hong kong project with the wacc : Illustration purposes, assume that the present worth of the total system cost is $20 million with financing sources and costs as follows. Compare the WACC for the Hong Kong (HK) project with the WACC of the existing projects.
Present value of annuity problem : You will receive $2,000 at the end of the next 12 years, assuming a 6% discount rate, what is the present value of the cash flow?
What objections does tom regan give to the utilitarian : What objections does Tom Regan give to the utilitarian approach to ethics?
Annual rate of return on investment in common stock : What is the annual rate of return on an investment in a common stock that cost $40.50 if the current dividend is $1.50 and the growth in the value of the shares and the dividend is 8 percent?
What is the difference between idealism and realism : What is the difference between idealism and realism? Support your definitions with practical examples

Reviews

Write a Review

Cost Accounting Questions & Answers

  Determine the annual depreciation expense

Determine the annual depreciation expense using the straight-line method and prepare the journal entry to record the expense.

  Calculate net advantage of closing the downtown store

Calculate the Net advantage of closing the Downtown Store and what recommendation would you make to the management of Thrifty Markets, Inc.?

  Prepare the current assets section of the balance sheet

During its first year of operations, Henley Company had credit sales of $3,000,000; $600,000 remained uncollected at year-end. The credit manager estimates that $35,000 of these receivables will become uncollectible.

  What is the dollar amount of income

London purchased a piece of real estate last year for $82,200. The real estate is now worth $103,400. If London needs to have a total return of0.20 during the year, then what is the dollar amount of income that she needed to have to reach her obje..

  What kind of fraud does the product apply

Will you give me some insight about the fraud prevention products online trading sites use and To what kind of fraud does the product apply?

  Preparing the statement of cash flows

The indirect method of preparing the statement of cash flows, how is each of the items treated - compute Hedgehogs merchandise available for sale for 2011

  Calculate the balance in the lease liability account

Calculate the amount of the lease liability at December 31 and calculate the balance in the lease liability account on december

  Find which bond has the highest change in price

20 year 0 coupon bond with a face value of $2,000 was issued at a rate of 10%. Currently the rate is 11%. 10 year 0 coupon bond with a face value of 10% is now is at 11%. Which bond has the highest change in price.

  What would be the depreciation expense

Determine the book value of the asset at the end of the THIRD year if the straight-line depreciation method is used and determine the depreciation expense for the SECONDyear assuming double-declining balance depreciation method is used.

  What is the harm to the company

Why would the manager do this and what is the harm to the company and what should Ace do, and why?

  You are required to write a reportyou work for an

you are required to write a report.you work for an accounting firm. your supervisor asks you to write a report on a new

  Analysis showing whether mesa verde should sell unpainted

Mesa Verde is considering staining and sealing the table to sell it for $100. Variable costs to finish each table are expected to be $17, and fixed costs are expected to be $3 - Prepare an analysis showing whether Mesa Verde should sell unpainted o..

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