Temporary housing services incorporated

Assignment Help Finance Basics
Reference no: EM131061141

Temporary Housing Services Incorporated (THSI) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a hurricane. THSI will lease space in this facility to various agencies and groups providing relief services to the area. THSI estimates that this project will initially cost $5 million to setup and will generate $20 million in revenues during its first and only year in operation (paid in one year). Operating expenses are expected to total $12 million during this year and depreciation expense will be another $3 million. THSI will require no working capital for this investment. THSI's marginal tax rate is 35%.

1) Ignoring the original investment of $5 million, what is THSI's free cash flow for the first and only year of operation?

2) Assume that THSI's cost of capital for this project is 15%. The NPV of this temporary housing project is?

Reference no: EM131061141

Questions Cloud

Assuming it adheres to its target capital structure : A company expects to earn $17 million in income this coming year. Its target capital structure is 30% debt, 15% preferred stock, and 55% common equity financing. The company normally pays a dividend equal to 30% of its earnings. At what point will it..
Acquisition or as compensation expense to employees : NaviNow Company agrees to pay $20 million in cash to the four former owners of TrafficEye for all of its assets and liabilities. These four owners of TrafficEye developed and patented a technology for real-time monitoring of traffic patterns on the n..
Increase in the velocity of money : Supposed there is an increase in the velocity of money caused by the increased use of ATM machines.
Price of a zero coupon bond : Assuming semi-annual compounding, what is the price of a zero coupon bond that matures in 3 years if the market interest rate is 5.5 percent? Assume par value is $1000.
Temporary housing services incorporated : Temporary Housing Services Incorporated (THSI) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a hurricane.
Determine whether the block shown is in equilibrium : Determine whether the block shown is in equilibrium and find the magnitude and direction of the friction force when θ= 25° and P = 150 lb
Construct a project plan : For your major project assignment you should select your own project. This may be something happening in your life at the moment or something that is to happen. You should research your project and then construct a project plan. You must ensure ..
What is the after-tax cash flow from the sale of this asset : Consider an asset that costs $176,000 and is in a seven-year MACRS class. The asset is to be used in a 7-year project; at the end of the project, the asset can be sold for $22,000. The relevant tax rate is 30 percent. What is the after-tax cash flow ..
General ledger for abc company : The following is the general ledger for ABC Company as of December 31, 20X1. Use this information to answer questions (1) through (4).

Reviews

Write a Review

Finance Basics Questions & Answers

  How much additional equity financing required for next year

If all assets, short-term liabilities, and costs vary directly with sales, how much additional equity financing is required for next year?

  Innovation and change and project management

How is Innovation and change and Project Management linked?

  Need to conduct a capital budgeting analysis

Since Ben Holt, Blades' chief ?nancial of?cer (CFO), believes the growth potential for the roller blade mar- ket in Thailand is very high, he, together with Blades' board of directors, has decided to invest in Thailand.

  Ocean breeze corps stock has a beta of 140 and its required

ocean breeze corps stock has a beta of 1.40 and its required return is 13.00. atlantic styles stock has a beta of

  The dodd-frank and sarbanes-oxley acts

An explanation of what relationship the Dodd-Frank and Sarbanes-Oxley Acts have to financial markets and what are the similarities or differences between these Acts.

  Which is recoverable at the end of the project

The project will require $3,000 of net working capital, which is recoverable at the end of the project. What is the net present value of this project at a discount rate of 12 percent and a tax rate of 34 percent?

  What is patti acid test ratio

Patti corporation has current assets of $ 11,400, inventories of $4,000, and a current of 2.6. What is Patti's acid test ratio?

  Which of the 3 m&m assumptions

describe what exactly is meant when someone is describing the value of the firm versus the value of the equity of the firm.

  What is the present value

What is the present value of $500 payments received at the beginning of each year for the next 10 years? Assume an interest rate of 9% compounded monthly.

  What types of risks should shareholder wealth-maximizing

What types of risks should shareholder wealth-maximizing managers seek to offset in a firm they are managing? Why?

  Does this mean the market risk premium was negative

In 2000, the S& P 500 Index earned 9.1 percent while the T- bill yield was 5.9 percent. Does this mean the market risk premium was negative? Explain.

  Calculate the payback period for the machine

Use the information in Problem 10 to do the following: a. Calculate the payback period for the machine. b. If the project's cost of capital is 10 percent, would you recommend buying the machine? c Estimate the IRR for the machine.

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