Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Polycorp is considering an investment in new plant of $3 million. The project will be financed with a loan of $2,000,000 which will be repaid over the next five years in equal annual end of year instalments at a rate if 9 percent pa. Assume straight-line depreciation over a five-year life, and no taxes. The projects cash flows before loan repayments and interest are shown in the table below. Cost of capital is 15.5% pa (the required rate of return on the project). A salvage value of $200,000 is expected at the end of year five and this salvage value is already included in the year five cash flows in the table below. Ignore taxes and inflation.
Year
Year One
Year Two
Year Three
Year Four
Year Five
Cash Inflow
900,000
950,000
850,000
You are required to calculate:
(1) The annual loan repayment
(2) NPV of the project
(3) The IRR of the project
(4) The annual equivalent for the project(AE or EAV)
(5) The payback in years (to one decimal place)
(6) The accounting rate of return (gross)
(7) PI (present value index or profitability index)
(8) Is the project acceptable? Why or why not (provide a full explanation)?
The stock of Big Joe's has a beta of 1.32 and an expected return of 11.70 percent. The risk-free rate of return is 4.2 percent. What is the expected return on the market?
The required rate of return is 10%. What is a fair price for the investment - assuming the discount rate and expected cash flows don't change - exactly 3 years from today. (In other words, what would the investment sell for in 3 years?
What is the internal rate of return for a project that has a net investment of $370,000 and net cash flows of $60,000 in year 1, $75,000 in year 2, and $85,000 in years 3 through 8?
It has been said that a balance sheet is a snapshot of the firm at some point in time. What does this mean? How does it differ from what the income statement is showing?
Optional sources of energy are being discussed as part of the national debate. One of the sources is wind power. You may look into a search engine of your choice for articles on wind power.
regulationderegulation papermuch discussion has occurred regarding the effects of regulation and deregulation on
A project has the following cash flows. Knowing that the required rate of return is 15%, should you accept or reject the project?
Describe Identification of Audit Errors made by EM and comparison of audit in compliance and Internal controls were reviewed in early 20x1 and EM determined that lack of segregation of duties existed in many areas of the company
Apocalyptica Corp. pays a constant $8.30 dividend on its stock. The company will maintain this dividend for the next 14 years and will then cease paying dividends forever. If the required return on this stock is 12 percent, what is the current sha..
suppose stock in watta corporation has a beta of .80. the market risk premium is 6 percent and the risk-free rate is 6
Sam's Corporation expects to pay a dividend of $6 per share at the end of year one, $9 per share at the end of year two, and then be sold for $136 per share at the end of year two.
pdq corp. has sales of 4000000 the firms cost of goods sold is 2500000 and its total expenses are 600000. the firms
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd