Project requires initial cash investment

Assignment Help Financial Management
Reference no: EM131356149

The Inventive Co. is considering a new project. This project requires an initial cash investment of $91,000. The project will generate cash inflows of $25,000 in the first year. Then, the project will do nothing for two years, after which time cash inflows of $33,000 will be generated for four years. How long will it take the Inventive Co. to recover its $91,000 investment?

Reference no: EM131356149

Questions Cloud

The net present value of project cash inflows : The net present value of a project's cash inflows is $10,146 at a 11.6 percent discount rate. The profitability index is 2.2 and the firm's tax rate is 35 percent. What is the initial cost of the project?
What is the firm weighted average cost of capital : Jemisen's firm has expected earnings before interest and taxes of $1,600. Its unlevered cost of capital is 13 percent and its tax rate is 34 percent. The firm has debt with both a book and a face value of $2,400. This debt has a 7 percent coupon and ..
Pyramid project has expected cash inflows : Setesh of Kanaan's new pyramid project has expected cash inflows, starting with year 1, of $2,800, $3,700, $5,400 and finally in year four, $8,500. The profitability index is 1.12 and the discount rate is 11.1 percent. What is the initial cost of the..
The expected return on the market portfolio : You believe that the Beta Alpha Watch Company will be worth $100 per share one year from now. How much are you willing to pay for one share today if the risk-free rate is 4%, the expected return on the market portfolio is 11%, and the company’s beta ..
Project requires initial cash investment : The Inventive Co. is considering a new project. This project requires an initial cash investment of $91,000. The project will generate cash inflows of $25,000 in the first year. Then, the project will do nothing for two years, after which time cash i..
Heavily undervalued bonds : Lambert Corning, Inc. specializes in buying heavily undervalued bonds. To do that this firm mainly searches bonds, which are being trading at well below par value and have relatively longer period to maturity. He has his eye on a bond issued by King ..
Identify ethical delimas and concerns of stakeholders : Mercedes has just begun work at Photobook.com. What a great place to work! Although the salary is not high, the company has fabulous perks. The dining room provides excellent food from 7 a.m. to midnight, 5 days a week. There is also a free laundry a..
What is implied credit spread for russian government bonds : Suppose the interest on Russian government bonds is 7.5%, and the current exchange rate is 27.1 rubles per dollar. If the forward exchange rate is 27.7 rubles per dollar, and the current U.S. risk-free interest rate is 4.9%, What is the implied credi..
Weighted average cost of capital : The target capital structure for QM Industries is 44 percent common stock, 14 percent preferred stock, and 42 percent debt. If the cost of common equity for the firm is 18.1 percent, the cost of preferred stock is 9.4 percent, the before-tax cost of ..

Reviews

Write a Review

Financial Management Questions & Answers

  River county is planning several capital acquisitions

Analyze the following scenario: River County is planning several capital acquisitions for the coming year. These include the purchase of two new garbage trucks at $150,000 each, one new bulldozer at $240,000, three new riding lawn mowers at $16,000 e..

  Compare the average value of the standard deviations

Compare the average value of the standard deviations of the returns on the securities included in each portfolio with the standard deviation of portfolio's returns.

  Calculate each projects payback period

Calculate each project's payback period, net present value (NPV),and internal rate of return (IRR).b. Which project (or projects) is financially acceptable? Explain your answer.

  New npv using variety of risk adjusted discount rates

The most recent example was the company decision whether to invest $50 Million in developing and implementing a new enterprise system to help manage resources and meet customer demand in the face of considerable technological and market uncertainty. ..

  Bullish on particular security

You are bullish on a particular security and have $500 to invest. The stock is trading for $100. Call options with a strike price of $100 are trading for $1.00. You decide to invest your entire $500 by purchasing call options. After 1 month the stock..

  Task is to analyze two mutually exclusive projects

Your task is to analyze two mutually exclusive projects: Using the payback criterion, which investment should you chose? Why? Using the discounted payback criterion, which investment should you chose? Why? Using the NPV criterion, which investment sh..

  Define and explain capex and how you calculate

Define A/R Turn Days and how you calculate. Define A/P Turn Days and how you calculate. Define Inventory Turn Days and how you calculate. Define and explain CAPEX and how you calculate.

  Assume that the contract value had not increased

Sophia purchased a variable annuity contract with $50,000 purchase payment. Surrender charges begin with 7 percent in the first year and decline by 2 percent each year. In addition, Sophia can withdraw 10 percent of her contract value each year witho..

  Assume that interest rate parity holds

Assume that interest rate parity holds and that 90-day risk-free securities yield 3% in the United States and 3.6% in Germany. In the spot market, 1 euro equals $1.38 dollar. Is the 90-day forward rate trading at a premium or discount relative to the..

  How fair is check into cash

Look at the Focus on Ethics box (“How Fair Is Check Into Cash”) in Chapter 5 of the textbook. These, businesses quote an interest rate of 15% to loan customers (most of whom are fairly unsophisticated) and yet the EAR of the loan is close to 400%. Ex..

  What is the estimated stock price

Stock ABC just paid a $1 dividend yesterday. The dividend is expected to grow at a rate of 25% for the next 3 years when the required return is 15%. After that, from year 4 and thereafter (forever), the expected dividend growth rate will be 5% and th..

  Deduct entire amount of interest which was paid on home loan

In 2009, Mr. Smith purchased a principal residence for $1,500,000. He made a down payment of $300,000 and financed the remainder by borrowing $1,200,000 through a loan secured by the residence. In 2009, Mr. Smith paid interest that accrued on the ind..

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