The required rate of return on the project

Assignment Help Financial Management
Reference no: EM131070813

A company considers a new project. The required rate of return (WACC) on the project is 10 percent. Which of the following statement is correct?

A. If the project’s NPV = $1,500, the company should accept the project.

B. If the project’s IRR < 10 percent, the company should accept the project.                    

C. If the project’s MIRR < 10 percent, the company should accept the project.                 

D. If the project’s PI > 0, the company should accept the project.  

E. If the project’s payback period > required cutoff payback, the company should accept the project.                 

F. If the project’s NPV < 0 and IRR > 10 percent, the company should accept the project.

Reference no: EM131070813

Questions Cloud

What is the duration of bond : Stone & Co. bonds are selling at 95, yielding 5.25%, let's assume that yields increase by 25bps, causing the price to decline to 93. How much has the price changes, in percentage? Now let's assume that yields decrease by 25 bps, causing the price to ..
Calculate the expected liquidity premium yields for path : Calculate the expected liquidity premium yields for a (1,5,2) path. Calculate the expectations yields for a (3,4,1) path. Calculate the real world yield for a (3,5) path. Calculate the expected pure expectations yield for a 3-year note purchased at t..
Calculate expected rate and standard deviation of return : The common stock of Leaning Tower of Pita Inc., a restaurant chain, will generate payoffs to investors next year, which depend on the state of the economy, as follows: The company goes out of business if a recession hits. Calculate the expected rate ..
About the forward contract : Forward Contract. The Wolfpack Corporation is a U.S. exporter that invoices its exports to the United Kingdom in British pounds. If it expects that the pound will appreciate against the dollar in the future, should it hedge its exports with a forward..
The required rate of return on the project : A company considers a new project. The required rate of return (WACC) on the project is 10 percent. Which of the following statement is correct?
What will be the rate of return on the bond : A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $92 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is (Do not round intermediate calculations...
What is the probability that the economy will boom : An investor owns a security that is expected to return 14 percent in a booming economy and 6 percent in a normal economy. The overall expected return on the security is 8.88 percent. Given there are only two states of the economy, what is the probabi..
Calculate the dollar price increase and decrease : Consider a Zerobond (i.e., a bond that pay s no coupon payment, meaning that the coupon rate on the bond is 0%) with a par value of $1,000 that will mature exactly 12 years from today The current YTM of this Zerobond is 5.2% Two years ago the YTM of ..
Exchange rate effects on borrowing : Exchange Rate Effects on Borrowing. Explain how the appreciation of the Japanese yen against the U.S. dollar would affect the return to a U.S. firm that borrowed Japanese yen and used the proceeds for a U.S. project.

Reviews

Write a Review

Financial Management Questions & Answers

  Integration planning is undertaken-acquisition activities

Integration planning is undertaken in which of the following acquisition activities?

  What is the present value of the same annuity due

Present Value of an Annuity Due If the present value of an ordinary, 6-year annuity is $8,500 and interest rates are 9.5 percent, what’s the present value of the same annuity due?

  According to the efficient market hypothesis

According to the efficient market hypothesis, price of actively traded stocks ____.

  What is the cash flow to creditors

Consider the following abbreviated financial statements for Parrothead Enterprises: PARROTHEAD ENTERPRISES 2010 and 2011 Partial Balance Sheets Assets Liabilities and Owners’ Equity 2010 2011 2010 2011 Current assets $ 940 $ 996. What is the cash flo..

  Depreciated over five years using the straight-line method

Scott Investors, Inc., is considering the purchase of a $363,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $63,000 in ..

  Indifferent between accepting or rejecting the project

Barrett Pharmaceuticals is considering a drug project that costs $2.47 million today and is expected to generate end-of-year annual cash flows of $221,000 forever. At what discount rate would Barrett be indifferent between accepting or rejecting the ..

  Accounting for stock dividends and stock splits

The following transactions occurred during the year in the following sequence: Declared and distributed a 10% stock dividend on the outstanding common shares at a time when the common shares were selling for $15 per share. Calculate the par value per..

  Considering project which will provide annual cash inflows

You are considering a project which will provide annual cash inflows of $4,500, $5,700, and $8,000 at the end of each year for the next three years, respectively. what is the net present value of these cash flows, given a 9 percent discount rate?

  Financial viability currently and in the future

Ascension Health growing? What line items reflected the largest-percentage increases and/or decreases? What is the financial impact these changes have on the company's financial viability currently and in the future?

  The securitys marketability and liquidity

What is an IPO, and what role does an investment banker play in the process? Suppose you own a security that you know can be easily sold in the secondary market, but the security will sell at a lower price than you paid for it. What would this mean f..

  Bank account to cover college expenses over next three years

Beginning three months from now, you want to be able to withdraw $2,100 each quarter from your bank account to cover college expenses over the next three years. If the account pays .43 percent interest per quarter, how much do you need to have in you..

  Significantly lower than the corporate bond yields

Municipal bond’ yields are significantly lower than the corporate bond yields even with the same credit rating. Why do you think this is so?

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