Expected to result in after-tax cash flows

Assignment Help Financial Management

Reference no: EM13721648

A company has an opportunity to invest in a project that is expected to result in after-tax cash flows of $18,000 the first year, $20,000 the second year, $23,000 the third year, -$8,000 the fourth year, $30,000 the fifth year, $36,000 the sixth year, $39,000 the seventh year, and - $6,000 the eighth year. The project would cost the firm $142,000. If the firm's cost of capital is 13%, what is the modified internal rate of return for the project?

Reference no: EM13721648

Questions Cloud

What is the yield to maturity of a bond that sells : What is the yield to maturity of a bond that sells for $1,045 today and pays $30 every six months and matures in 12 years if bonds issued today are paying $40.00 annually?

Discussion on the different bond features : Please provide a thorough discussion on the different bond features someone might consider pref. For example, some bonds are tax free (municipal bonds), some are insured. Of course there is a trade off between risk and return. Do you think that there..

Manufacturing is considering upgrading a piece of equipment : A manufacturing is considering upgrading a piece of equipment. If a certain upgrade helps reduce operating costs by $750 per hour of use, and the upgraded equipment will be used on average 8 hours per day, what is the expected annual savings of upgra..

Excess short-term cash in particular money market investment : The treasurer of a large corporation wants to invest $45 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.65 percent; that is, the EAR for this investment is 3.65 per..

Expected to result in after-tax cash flows : A company has an opportunity to invest in a project that is expected to result in after-tax cash flows of $18,000 the first year, $20,000 the second year, $23,000 the third year, -$8,000 the fourth year, $30,000 the fifth year, $36,000 the sixth year..

Firm currently has equity with a market value : A firm currently has equity with a market value of $600,000,000 and debt with a market value of $500,000,000. The firm has 10,000,000 shares outstanding. The bonds offer investors a return of 8%. The firm is contemplating issuing $300,000,000 in new ..

What is the current value of this investment : An investment offers $10,000 a year for 20 years. If an investor can earn 6 percent annually on other investments, what is the current value of this investment? If its current price is $120,00, should the investor buy it?

What is the most willing to pay for gamma common stock now : You are considering the purchase of a share, gamma incorporate it common stock. You expect to sell it at the end of one year for $56 per share. You will receive $2.56 per share the end of the next year. If you're required return on the stock is 8.3% ..

What rate of growth must be expected for spencer : Spencer Supplies stock is currently selling for $60 per share. The firm is expected to earn $5.10 per share this year and to pay a year-end dividend of $3.70.

User Account

All Pages