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!
Galaxy Satellite Co. is attempting to select the best group of independent projects competing for the firm's fixed capital budget of $10,000,000. Any unused portion of this budget will earn less than its 20 percent cost of capital. A summary of key data about the proposed projects follows. Project PV of Inflows Initial Investment IRR A $3,050,000 $3,000,000 21% B $9,320,000 $9,000,000 25% C $1,060,000 $1,000,000 24% D $7,350,000 $7,000,000 23% 1.Use the NPV approach to select the best group of projects. (Note that just the PV of inflows is given, you must subtract the initial investment to find the NPV.) 2.Use the IRR approach to select the best group of projects. (Note that the discount rate or the cost of capital is 20%.) 3.Which projects should the firm implement based on your analysis of both techniques and given the capital rationing amount? Write an email to your boss, Andy Fast, the CFO, explaining your rationale proving the choices based on the considerations of shareholder value and the maximum investment budget. Keep in mind that you are less concerned with using the whole budget than with maximizing the total return to Galaxy satellite.
We are evaluating a project that costs $520,000, has a six-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. What is the sensitivity of NPV to changes in the sales figure? What is the..
Thornley Machines is considering a 3-year project with an initial cost of $720,000. The project will not directly produce any sales but will reduce operating costs by $410,000 a year. The equipment is depreciated straight-line to a zero book value ov..
Copernicus borrows $L and repays the principal by making ten annual payments at the end of the year into a sinking fund which earns an annual effective rate of 8%. The interest earned on the sinking fund in the third year is $85.57. Determine L.
Explain the key objective of corporate financial management and why this might not be the same as maximising accounting profit and describe the principal characteristics of primary and secondary capital markets.
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $983.84. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,097.53, what is the yield that Trevor would earn by sell..
A project costs $10,000 to pursue today and generates pre-tax cost savings of $1,500 per year for the foreseeable future. The marginal tax rate is 35%. The project also requires an initial NWC investment of $300 which will not be required. If the req..
What is the third-party-payer system in your organization? How does this system impact your organization?
A student arrives in London on the first leg of a European vacation and promptly converts all his cash ($2,500) into pounds sterling (GBP). The rate quoted was 1.5696-700 dollars per pound. how much did he receive in pounds sterling on his arrival in..
Suppose the spot price of gold is $1200 per ounce. The futures price for delivery in six months is $1208, while the futures price for delivery in one year is $1214. The interest rate on 6-month loans is 1.00percent (on an annual basis).
Broussard Skateboard's sales are expected to increase by 25% from $8.0 million in 2015 to $10.00 million in 2016. Its assets totaled $3 million at the end of 2015. Broussard is already at full capacity, so its assets must grow at the same rate as pro..
Jay Company has a debt-to-equity ratio of 2.0. Jay is evaluating the cost of equity for a project in the same line of business as Cass Company and will use the pure-play method with Cass as the comparable firm. Cass has a beta of 1.2 and a debt-to-eq..
Suppose an investment offers to quadruple your money in 18 months (don’t believe it). What rate of return per quarter are you being offered?
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