### What is the firm optimal capital budget

Assignment Help Financial Management
##### Reference no: EM132014257

Karsted Air Services is now in the final year of a project. The equipment originally cost \$35 million, of which 90% has been depreciated. Karsted can sell the used equipment today for \$8.75 million, and its tax rate is 30%. What is the equipment's after-tax salvage value? Round your answer to the nearest dollar. Write out your answer completely. For example, 13 million should be entered as 13,000,000. Marble Construction estimates that its WACC is 10% if equity comes from retained earnings. However, if the company issues new stock to raise new equity, it estimates that its WACC will rise to 10.8%. The company believes that it will exhaust its retained earnings at \$2,500,000 of capital due to the number of highly profitable projects available to the firm and its limited earnings. The company is considering the following seven investment projects: Project Size IRR A \$650,000 14.0% B 1,050,000 13.5 C 1,000,000 11.2 D 1,200,000 11.0 E 500,000 10.7 F 650,000 10.3 G 700,000 10.2 Assume that each of these projects is independent and that each is just as risky as the firm's existing assets. Which set of projects should be accepted? Project A Project B Project C Project D Project E Project F Project G What is the firm's optimal capital budget? Write out your answer completely. For example, 13 million should be entered as 13,000,000. \$.

#### Questions Cloud

 What is the firm optimal capital budget in this case : What is the firm's optimal capital budget in this case? Which set of projects should be accepted? What is the duration if the yield to maturity : Find the duration of a 9.4% coupon bond making annual coupon payments if it has 3 years until maturity and has a yield to maturity of 9.4%. Estimate the first-year cash flow for proposed project : Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. What is the initial investment outlay for the spectrometer : You must evaluate the purchase of a proposed spectrometer for the R&D department. What is the initial investment outlay for the spectrometer, What is the firm optimal capital budget : Karsted Air Services is now in the final year of a project. What is the firm's optimal capital budget? Estimate assumes that economic conditions will be average : Huang Industries is considering a proposed project whose estimated NPV is \$12 million. This estimate assumes that economic conditions will be "average." What is the costumer lifetime value for net for you : what is the costumer lifetime value for Net-4-you? Stock valuation-what is the current share price : Cornwing Corporation pays a constant \$4.00 dividend on its stock. what is the current share price? What will be your total profit as measured in USD : You have a borrowing capacity of 5 million USD, and 500 million JPY. what will be your total profit, as measured in USD?

### Write a Review

#### Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

#### Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

#### Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

#### Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

#### Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

#### Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

#### Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

#### Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

#### Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

#### Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

#### Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.