Terms of the present value of those cash flows

Assignment Help Financial Management
Reference no: EM13945122

You have determined the profitability of a planned project by finding the present value of all the cash flows from that project. Which of the following would cause the project to look more appealing in terms of the present value of those cash flows?

A. The discount rate decreases.

B. The cash flows are extended over a longer period of time, but the total amount of the cash flows remains the same.

C. The discount rate increases.

D. Answers A and B above.

Please explain.

Reference no: EM13945122

Questions Cloud

The weight at birth of males has a mean value : The weight at birth of males has a mean value of 3.53 kg with a standard deviation of 0.58. What birth weight has a z-score of 0.81? Round to the nearest hundredth as needed.
Retirement account at interest compounded annually : You deposit $2,500 today in a retirement account at 6% interest compounded annually. How much more money will you have if you leave it in a for 35 years rather than 25 years?
Required rate of return on the stock : GoFit Training Inc just paid an annual year-end dividend of $1.60 per share. It plans to increase the dividend by 7% next year, and increase it by the same percentage for the future. If the required rate of return on the stock is 8%, what is the valu..
Director of marketing for a company manufacturing laundry : The director of marketing for a company manufacturing laundry detergent conducts an experiment to compare satisfaction with the laundry detergent product based on level of temperature used for the wash. A random sample of 500 individuals
Terms of the present value of those cash flows : You have determined the profitability of a planned project by finding the present value of all the cash flows from that project. Which of the following would cause the project to look more appealing in terms of the present value of those cash flows?
Discount rate should the firm apply to project cash flows : Deep Mines has 14 million shares of common stock outstanding with a beta of 1.15 and a market price of $42 a share. There are 900,000 shares of 9 percent preferred stock outstanding valued at $80 a share. What discount rate should the firm apply to a..
The company increases advertising expenditures : The sales manager believes the company could increase sales by 3,000 units if advertising expenditures are increased by $30,000. Determine the effect on income if the company increases advertising expenditures.
What must the debt-equity ratio : A firm wishes to maintain a growth rate of 8 percent and a dividend payout ratio of 62 percent. The ratio of total assets to sales is constant at 1, and the profit margin is 10 percent. What must the debt-equity ratio be if the firm wishes to keep th..
Retirement account from her previous job : Rihab just got a new job and wants to roll over her retirement account from her previous job at a large corporation into an IRA. Rihab should speak to a finacial palnner to make sure she follows the rollover rules to avoid taxes.

Reviews

Write a Review

Financial Management Questions & Answers

  Basis in the equipment received in the exchange

Fred and Sarajane exchanged equipment in a qualifying-like-kind exchange, Fred gives up equipment with an adjusted basis of $14,000 (fair market value of $15,000)in exchange for Sarajane's equipment with a fair market value of $12,000 plus $3,000 cas..

  What is the companys cost of equity capital

The Graber Corporation’s common stock has a beta of 1.2. If the risk-free rate is 4.3 percent and the expected return on the market is 13 percent, what is the company’s cost of equity capital?

  The amount of debt increases in firms capital structure

In the traditional approach to capital structure, as the amount of debt increases in a firm's capital structure,

  What will portfolios new beta be after these transactions

You have a $2 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1.25. You are considering selling $100,000 worth of one stock with a beta of 1.1 and using the proceeds to purchase anothe..

  The dunning million finance its expansion into new markets

The Dunning Co. needs to raise $66.7 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. The offer price is $67 per share and the company  underwriters c..

  What is the firms cost of its common stock

A firm's common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is $1.74. Its dividend payments have been growing at a constant rate for the last four years. Four years ago, the dividend wa..

  Calculate the possible arbitrage profits

Calculate the possible arbitrage profits given the following environment. Make sure you show all calculations and explain the steps needed to realize the profit.

  Describe extraordinary approaches to customer service

You have just been given the opportunity at OTTC to build a new website for the company to improve customer contact and service. Based on the services and products they offer think about how you will address customer service and how you will create c..

  Convertibles securities add value to firms using them

It is always better to finance long term projects with equity rather than debts. Discuss.

  What is the amount of the net income

A firm has a return on equity of 15%. The debt-equity ratio is 50%. The total asset turnover is 1.25 and the profit margin is 8%. The total equity is $3,200. What is the amount of the net income?

  Firms total operating costs-depreciation and amortization

Previous info: Total asset turnover is 4.1x and net annual sales are $42.90 million. If the firm has $6 million of total debt, its debt ratio is %50. Stockbridge pays 10% annual interest on its outstanding debt. If the firm's total operating costs (i..

  Attempting to value a call option with an exercise price

You are attempting to value a call option with an exercise price of $108 and 1 year to expiration. The underlying stock pays no dividends, its current price is $108, and you believe it has a 50% chance of increasing to $130 and a 50% chance of decrea..

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