If the discount rate is infinite and zero

Assignment Help Financial Management
Reference no: EM13909467

An investment has an installed cost of $535,800. The cash flows over the four-year life of the investment are projected to be $213,850, $230,450, $197,110, and $145,820.

If the discount rate is zero, what is the NPV? (Do not round intermediate calculations.)

If the discount rate is infinite, what is the NPV? (Negative amount should be indicated by a minus sign.)

At what discount rate is the NPV just equal to zero? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Reference no: EM13909467

Questions Cloud

The dividend should grow rapidly : Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $2.00 coming 3 years from toda..
Evaluate implications of this volume to value shift : Analyze the current economic shift from volume-based health care to value-based health care. What economic principles (macro and micro) are driving this shift?
Comment on the similarities or differences in the ratio : Piaggio, Polaris, and Arctic Cat are competitors in the global marketplace. Selected data for Piaggio follow.
Find constant a and explain how this follows from the slln : There is a constant α such that limn→∞(1/n)[log2(Zn/Z0)] = α WP1. Find α and explain how this follows from the SLLN. Using (c), show that limn→∞ Zn = β WP1 for some β and evaluate β.
If the discount rate is infinite and zero : An investment has an installed cost of $535,800. The cash flows over the four-year life of the investment are projected to be $213,850, $230,450, $197,110, and $145,820. If the discount rate is infinite, what is the NPV?
What methodology, if any, is currently in use : Consider an organization you're familiar with. If you were benchmarking the logistical functions of this organization, what methodology would you use? What methodology, if any, is currently in use? Comment upon its appropriateness. Please support ..
What is the value of martell minings stock : Martell Mining Company's ore reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 9% pe..
What is the stocks expected price : A stock is expected to pay a dividend of $2.00 the end of the year (that is, D1 = $2.00), and it should continue to grow at a constant rate of 5% a year. If its required return is 13%, what is the stock's expected price 1 years from today?
Calculate the average check per meal period : An owner invested $180,000 in a new family-style restaurant, of which $160,000 was immediately used to purchase equipment and $20,000 was retained for working cash. Calculate the average check per meal period that will cover all costs, including desi..

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the values for the inquirer oil index

What are the advantages and disadvantages of Henry's new index relative to the present index?

  Blue book value of her vehicle in the used-car marketplace

A friend of yours just bought a new sports car with a $4,000 down payment, and her $25,000 car loan is financed at an interest rate of 0.25% per month for 48 months. After 2 years, the "Blue Book" value of her vehicle in the used-car marketplace is $..

  What is the cash conversion cycle

What is the Cash Conversion Cycle (CCC)? Name the components of the CCC and explain why the CCC is important to business.

  What price should he offer to pay for the house

Doug decided to purchase the run-down one-bedroom home next door to clean up the neighbourhood and, hopefully, make a profit. As he starts into repairs, he discovers rotting floorboards throughout the first floor, running up his repair cost an additi..

  Payback period for a project with an initial investment

What is the payback period for a project with an initial investment of $180,000 that provides annual cash inflow of $40,000 for the first three years and $25,000 per year for years four and five, and $50,000 per year for years six through eight?

  What is the effective annual interest rate

You have two options of paying for your new dishwasher, you can either make a single payment of $400 today, or you can pay $70 for the next 6 months, with the first payment made today. what is the effective annual interest rate (EAIR) of the second o..

  Average does it take the firm to sell an inventory item

Middleton's has sales for the year of $311,400, cost of goods sold equal to 74 percent of sales, and an average inventory of $42,800. The profit margin is 6 percent and the tax rate is 34 percent. How many days on average does it take the firm to sel..

  What is the weighted average cost of capital

The family dollar company plans a $14 million expansion. The expansion is to be financed by selling $6 million in new debt and $8 million in new common stock. The before tax required rate of return on debt is 8% and the required rate of return on equ..

  What is the definition of the term agency problem

What is the definition of the term agency problem?

  According to modigliani miller theory with corporate taxes

The M Company has an EBIT of $250,000 that is constant over time and a corporate tax rate of 35%. Company M uses $5,500,000 of debt financing. If M used no debt, its cost of equity would be 12%. According to the Modigliani Miller theory with corporat..

  What is the margin of safety in units sold

Juliet’s Children’s Clothes Company (JCCC) has a target profit of $100,000. That profit requires unit sales to be 2,000. JCCC’s variable cost per unit is $100 and fixed expenses are $50,000. If JCCC achieves that target profit, what is the margin of ..

  What is the current yield on alaska power company bonds

Alaska Power Company issued $1,000 bonds that have an annual coupon rate of 6.5%. The present market value of the bonds is $1,225. If the bonds have 17 years remaining until maturity, what is the current yield on Alaska Power Company bonds?

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