Find net present value of these cash flows for discount rate

Assignment Help Financial Management
Reference no: EM13974521

A Pharmaceutical manufacture has projected net profits for a new drug that is being released to the market over the next five years: Use a spreadsheet to find the net present value of these cash flows for a discount rate of 3%.

Year                  Net Profit

1                       $(300,000,000)

2                       $(145,000,000)

3                       $50,000,000

4                      $125,000,000

5                     $530,000,000

Reference no: EM13974521

Questions Cloud

Arguments in favor of and against mandatory auto insurance : What are some arguments in favor of and against mandatory auto insurance? Which would be your preference and why? What should be the main factors used to determine the amount a person pays for auto insurance? Consider such factors as driving record, ..
Solved for the cash flow in terms of the present value : You have just purchased a home by borrowing $400,000 for 30-years at a fixed APR of 3.87%. What is the monthly mortgage payment? (Hint: A mortgage is just an annuity where the borrowed amount is the present value of the annuity. So, use the annuity f..
Equal monthly payments of compound interest and principal : Jeff wants to purchase a new automobile. The one he has selected will cost $25,000 including all fees (e.g., tax, title, and licensing). Jeff has saved $10,000 to use as a down payment. He plans to finance the balance though a loan. The loan would be..
Decide to fully fund plant and equipment purchase by issuing : It is January 2nd and senior management of Chester meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing $10,000,000 in bonds.   Assume the bonds are issued at face value and levera..
Find net present value of these cash flows for discount rate : A Pharmaceutical manufacture has projected net profits for a new drug that is being released to the market over the next five years: Use a spreadsheet to find the net present value of these cash flows for a discount rate of 3%.
What is total opportunity cost for the class : Josh has decided to take a course at the local community college that could help him get a promotion at work. The course begins at 5 p.m. and goes until 9 p.m. on Monday nights. Josh normally works until 5 p.m. each day, but because of the drive time..
What is the periodic interest rate : You have just purchased a home by borrowing $400,000 for 30-years at a fixed APR of 3.87%. The loan payments are monthly and interest is compounded monthly. What is the periodic interest rate? (I.e., what is the monthly interest rate?)
Firms estimated intrinsic value per share of common stock : You have been assigned the task of using the corporate or free cash flow, model to estimate Petry Corporation's intrinsic value. The firm's WACC is 10.00%, its end-of-year free cash flow is expected to be $90.0 million, the FCFs are expected to grow ..
Estimate for weight of debt for use in calculating the WACC : Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The firm's tax rate is 40%. ..

Reviews

Write a Review

Financial Management Questions & Answers

  Time to reach a financial goal

You have $21,072.44 in a brokerage account, and you plan to deposit an additional $6,000 at the end of every future year until your account totals $210,000. You expect to earn 11% annually on the account. How many years will it take to reach your goa..

  Cost of common equity with and without flotation

The Evanec Company's next expected dividend, D1, is $3.60; its growth rate is 5%; and its common stock now sells for $32. New stock (external equity) can be sold to net $30.40 per share. What is Evanec's cost of retained earnings, rs? What is Evanec'..

  Dividend is expected to grow at a constant rate

Crazee Enterprises Corporation just paid a dividend and it expects that dividend to grow by 10 percent for the next three years. After that, the dividend is expected to grow at a constant rate of 5 percent in perpetuity. If the company's stock is cur..

  Calculate the best-case and worst-case NPV figures

We are evaluating a project that costs $744,000, has a six-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 45,000 units per year. Calculate the best-case and ..

  About the net appliance sales

Luisa Gomes works for Southeast Appliance Mart. She receives a biweekly salary of $1,200 for which she must sell $15,000 worth of appliances. She also receives a commission of 3% on net sales above $15,000. What will be Luisa's pay for two weeks when..

  The growth rate in dividends-what is the stock price

Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $2.60 next year. The growth rate in dividends for all three companies is 4 percent. The required return for each company’s stock is 6 percent, 9 percent, and 12 percent, respective..

  Pro-forma incremental earnings and pro-forma free cash flow

Can you describe a situation when we use pro-forma incremental earnings and pro-forma free cash flow? I still can’t understand how they work in a real world.

  Bonds outstanding with coupon rate

Union Local School District has bonds outstanding with a coupon rate of 3.6 percent paid semiannually and 17 years to maturity. The yield to maturity on these bonds is 3.9 percent and the bonds have a par value of $5,000. What is the price of the bon..

  Importance of a balanced capital structure and the problems

The importance of a balanced capital structure and the problems which are associated with high levels of gearing.

  Indexed funds can produce higher returns than managed funds

Studies have shown that indexed funds can produce higher returns than managed funds; this is evidence in support of:

  Assuming monthly compounding

You want to borrow $69,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,200, but no more. Assuming monthly compounding, what is the highest rate you can afford on a 78-month APR loan?

  Recently purchased machinery parts worth

Trident Corp. recently purchased machinery parts worth 23.5 million Mexican Pesos (MP). Management needs to find out the U.S. dollar cost of the payables. It has access to two quotes for Canadian dollars (C$): C$1.0774/$ and C$0.0981/MP. What will it..

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