Proposed project requires an initial cash outlay

Assignment Help Financial Management
Reference no: EM131188337

A proposed project requires an initial cash outlay of $49,000 for equipment and an additional cash outlay of $18,700 in Year 1 to cover operating costs. During Years 2 through 4, the project will generate cash inflows of $42,500 a year. What is the net present value of this project at a discount rate of 11.6 percent? $25,810.33 $26,343.72 $23,602.18 $24,399.99 $26,391.08

Reference no: EM131188337

Questions Cloud

What is the value of your investment in stock : You own a $36,800 portfolio that is invested in Stocks A and B. The portfolio beta is equal to the market beta. Stock A has an expected return of 22.6 percent and has a beta of 1.48. Stock B has a beta of .72. What is the value of your investment in ..
What is the cost of new preferred equity : Northman’s common equity, debt, and preferred equity are worth $70,000, $10,000 and $20,000 respectively with a total value is $100,000. The company’s common stock is currently listed at $54 per share; new preferred stock sells for $70 per share with..
Market share leader in radar detection systems : Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant over..
What is the cost of equity for this firm : The common stock of Mill Stones has a beta that is 8 percent greater than the overall market beta. Currently, the market risk premium is 7.65 percent while the U.S. Treasury bill is yielding 4.3 percent. What is the cost of equity for this firm?
Proposed project requires an initial cash outlay : A proposed project requires an initial cash outlay of $49,000 for equipment and an additional cash outlay of $18,700 in Year 1 to cover operating costs. During Years 2 through 4, the project will generate cash inflows of $42,500 a year. What is the n..
Security produced returns : A security produced returns of 11 percent, 7 percent, 9 percent, 13 percent, and -14 percent over the past five years, respectively. Based on these five years, what is the probability that this stock will earn more than 16.16 percent in any one given..
Outdoor sports is considering adding a miniature golf : Outdoor Sports is considering adding a miniature golf course to its facility. The course would cost $138,000, would be depreciated on a straight-line basis over its five-year life, and would have a zero salvage value. The project will require $3,000 ..
Establish its optimal capital structure : A company is trying to establish its optimal capital structure. Its current capital structure consists of 66.42 percent debt and 100-66.42 percent equity; however, the CEO believes that the firm should use more debt. What would be the firm’s estimate..
What is the maximum initial cost the company : Scanlin, Inc., is considering a project that will result in initial aftertax cash savings of $1.86 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. What is the maximum initial cost the co..

Reviews

Write a Review

Financial Management Questions & Answers

  Retirement saving project

To gain an understanding of the affect of start date, rate of return, inflation and taxes on what it will take you to save a set amount of money by the time you retire at age 65. What conclusions would you make regarding when you should begin investi..

  Provide insight into effective and efficient strategies

Using the information provided by IBM and others, indicate which of the principles designed to provide insight into effective and efficient strategies on how to best deploy financial management systems, which were outlined within the related article,..

  Classified as quid pro quo harassment or hostile environment

Develop a list of behaviors that could be classified as quid pro quo harassment or hostile environment. Explore the possibility that some sexual harassing behaviors might be viewed differently by female and male employees. Give examples.

  What is the implied annual storage cost

The spot rare for soybeans is 1320 and the 6 month forward price is 1350 the risk free is 4% the lease rate on the 6 month soybean contract is 0.35%. What is the implied annual storage cost if the cost is continuously paid and proportional?

  Potential methods of modifying end-of-year-six cash flow

You are considering an investment in a new sub-industry of interest to your firm. To understand the importance of terminal value assumptions you have decided to calculate NPV under two different sets of assumptions. The appropriate discount rate for ..

  Difference between fixed-variable and semivariable costs

As policymakers and healthcare managers consider various ways to contain the rising costs of health care, it is useful to examine the patterns and elements of health care costs that are needed to run the United States delivery system. Explain the dif..

  Standard form regarding the sale of goods

A faxed its standard form regarding the sale of goods to B. B responded by faxing its standard form to A. The standard forms do not agree on material terms. Under UCC section 2-207, when will there be a contract? Assume that B did not make its accept..

  If interest rates fall values of real options will increase

The more volatile the underlying source of risk, the more valuable the option. In general, the longer before a real option must be exercised, the more valuable it is. If interest rates fall, the values of real options will increase.

  Consider european call option on non dividend-paying stock

Consider a European call option on a non dividend-paying stock. This option is priced using a two-period binomial tree.

  Addition net working capital investments

Production of the implants will require $1,800,000 in net working capital to start and addition net working capital investments each year equal to 15 percent of the projected states sales increase for the following year. Total fixed costs are $2,500...

  What is the current yield in percentage on these bonds

The bonds of B&C , Inc. are currently priced at $1058.19 and have 10.83 percent coupon. The bonds pay interest semi-annually and mature in 12 years. What is the current yield, in percentage, on these bonds?

  Research a company that is in the franchise business

Briefly describe the company’s franchise structure which you researched. Suggest one (1) way in which the company could improve its franchise structure to make it more attractive to potential customers. Outline a fraud prevention plan for a retail or..

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