Find the net present value

Assignment Help Financial Management
Reference no: EM131917871

EBIT = 1,000 Depreciation = 250 Taxes = 100 Net increase in Working Capital = 50 Net Increase in Capital Expenditure = 250 Long-term sustainable growth = 4% Risk free rate = 3% Beta = 1.5% Equity Risk Premium = 7% D/E = 0.333 Investment = -$10,000 (occurs at time = 0) Cost of debt (prior to tax adjustment) = 7% Corporate tax rate = 33% FIND: Net Present Value (NPV). Use CFFA for cashflow and WACC for the discount rate. Multiple choice options provided: 900 1,498 1,644 1,450 1,725 1,877 850

 

Reference no: EM131917871

Questions Cloud

What was the speculative premium per warrant : What was the intrinsic value of a warrant at the time of purchase? What was the speculative premium per warrant when the warrants were purchased?
What is the post money valuation of the company : What is the post money valuation of the company? What % of the total shares will the venture capitalist own?
Calculate the after-tax cost of capital : Find the cost of equity and debt. Calculate the after-tax cost of capital (WACC) and explain briefly what does this result mean?
What is your payment if the six-month libor : Three months from today you plan to borrow $1.8 Billion for 6 months at LIBOR. what is your payment if the 6-month LIBOR is .28% in two months?
Find the net present value : EBIT = 1,000 Depreciation = 250 Taxes = 100 Net increase in Working Capital = 50. FIND: Net Present Value (NPV).
Present value of the expected premiums from the CDS : What is the present value of the expected premiums from the CDS? find the present value of the expected payoffs
Poet care about the problems of american poetry : Why should anyone but a poet care about the problems of American poetry? What possible relevance does this archaic art form have to contemporary society?
Historical or cultural context and its creator : Describe each of your selected examples, including its historical or cultural context and its creator, and provide either a link to the example or an embedded.
Problems of american poetry : Why should anyone but a poet care about the problems of American poetry? What possible relevance does this archaic art form have to contemporary society?

Reviews

Write a Review

Financial Management Questions & Answers

  Return the firm should earn given level of risk

Compute the return the firm should earn given its level of risk.

  Calculate the expected rate of return on risk-free portfolio

Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, rƒ. The characteristics of two of the stocks are as follows: Stock Expected Return Standard Deviation A 5 % 20 % B 8 % 80 % Correlation = –1. C..

  The straight method is used to depreciation fixed assets

As a recently appointed auditor for Gibbs Manufacturing Co., the Manager of the audit, asked you to examine selected accounts before issue the financial statement of 12/31/10, to be audited. The straight method is used to depreciation fixed assets. T..

  What is the estimated value of preferred stock

Several years ago, Rolen Riders issued preferred stock with a stated annual dividend of 10% of its $100 par value. Preferred stock of this type currently yields 7%. Assume dividends are paid annually. What is the estimated value of Rolen's preferred ..

  What is accumulated sum of the stream of payments

What is the accumulated sum of the following stream of payments?

  Determine that upon retirement

Jack and Jill determine that upon retirement, they will need to withdraw $70,000 annually at the end of each year for the next thirty years. They know that they can earn 4% each year on their investment. How much will Jack and Jill need in their reti..

  Indifferent between accepting the project and rejecting

A project that provides annual cash flows of $2,700 for nine years costs $8,800 today. At a required return of 28 percent, what is the NPV of the project? At what discount rate would you be indifferent between accepting the project and rejecting it?

  Offered an investment opportunity

You are offered an investment opportunity: pay $1000 a year for ten years then you will receive $2000 a year for 20 years.” If you require 8% return on our investment, would you accept this investment opportunity?

  How many contracts are necessary to fully hedge the bank

Tree Row Bank has assets of $150 million, liabilities of $135 million, and equity of $15 million. How many contracts are necessary to fully hedge the bank?

  Financial assets created or destroyed in the transaction

CSU-Products is a start-up computer software development firm. It currently owns computer equipment worth $40,000 and has cash on hand of $10,000 contributed by CSU’s owners. For each of the following transactions, identify the real and/or financial ..

  What is the after-tax selling price of the old machine

Bulldog Inc. purchased a leather machine seven years ago. The cost of the machine was $11,200. It was expected to be used for 10 years. The machine has been depreciated on a straight-line basis with an estimated salvage value of s1.200. What is the b..

  The firm net working capital changed

The firm's net working capital changed from $28 at the beginning of the year to $30 at the end, depreciation was $52, and net fixed assets have gone up by $107.

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