User Account

All Pages

Find the correct net present value of the project

Assignment Help Accounting Basics
Reference no: EM132596318

Question - You have been asked to assess the net present value of a project analysis done by analysts at Ludens Inc., a firm that operates in both retailing and apparel production. The project, which is in the apparel business, has a 10-year life with equal annual cash flows over the period and an initial investment of $ 1 billion. You notice two problems with the analysis:

The analyst used a cost of capital of 10% (which is the company's cost of capital) in computing the net present value of $ 100 million. The cost of capital for the apparel business is 12%.

The analyst expensed the entire investment in year 0; you believe that this is not likely to get approval from the tax authorities, and that you would need to depreciate the investment straight line over 10 years to a salvage value of zero. The tax rate is 30%.

Find the correct net present value of the project.

Reference no: EM132596318

Questions Cloud

What intersectional characteristics can impact upon this : Original client research question for Ahmad Al-Hanbali ICP Project - What intersectional characteristics can impact upon this, and what initiatives
Business in global environment : Would you be willing to accept a "plum" promotion overseas if it entailed possible exposure to terrorist activities, either directly or indirectly?
Write a method that accepts two integer prime numbers : Write a method that accepts two integer prime numbers and returns their product. If either argument is not prime, throw a custom PrimeNumberException.
Identify the cost object in the selected company process : Define cost object and identify the cost object in the selected company's process. Identify and list 15-20 costs incurred in the process
Find the correct net present value of the project : The project, which is in the apparel business, has a 10-year life with equal annual cash flows over the period, Find the correct net present value of project
Explain the rationale for post-quantum cryptography : Explain the rationale for post-quantum cryptography and describe its relevance with different types of cryptographic algorithms.
Create a disaster recovery plan for the organization : Create a disaster recovery plan for either the organization they work for or one they wish to work for in the future. The plan will follow the template/example.
Determine the total variable cost is closest to : If 6,000 units are sold, the total variable cost is closest to? Variable manufacturing overhead $1.55. Variable administrative expense $0.85
Compare and contrast qualitative data vs quantitative data : Quantitative data can be measured and documented with numbers. Additionally, quantitative data can be represented as quantities. On the other hand, qualitative.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd