What is the present value of the projects terminal value

Assignment Help Financial Management
Reference no: EM131059806

You are the financial manager of a firm that is contemplating investing in a new project that you expect ill generate cash flows of $10,000 per year for five years and then $15,000 per year for another two years. At the end of seven years you expect to sell the project's assets for $50,000. You believe that you should earn at least 14% to compensate the shareholders for the project risk. What is the present value of the project's terminal value? What is the most that you should pay for this project? Is this project consistent with the firm's goal assuming you can invest $25,000 in this project? What is the primary goal of the firm?

Reference no: EM131059806

Questions Cloud

Municipal bond with coupon rate-what is price of the bond : A municipal bond with a coupon rate of 3.1 percent has a yield to maturity of 4.1 percent. Assume a face value of $5,000. If the bond has 8 years to maturity, what is the price of the bond?
Magnitude of the electric force between the clouds : Suppose two clouds containing equal numbers of electrons are separated by a distance of 2.4´ 1022 m.  If the magnitude of the electric force between the clouds is 1.0 N, what is the charge of each cloud?
Research will focus on new engine designs and emissions : Aircraft reciprocating-engine manufacturers appear to lag behind the automotive industry in technological advances being made in engine design and performance. This activity will involve researching the advances being made in aircraft reciprocati..
Reanalyze the data using r-mode analysis : (b) Reanalyze the data using R-mode analysis, that is, using the age distribution as the rows of the data matrix (Table 8.28). Can you determine the historical (time) behavior of the different age groups across race and sex?
What is the present value of the projects terminal value : You are the financial manager of a firm that is contemplating investing in a new project that you expect ill generate cash flows of $10,000 per year for five years and then $15,000 per year for another two years. At the end of seven years you expect ..
What is the aftertax salvage value of manufacturing plant : Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). Calculate the project’s Time 0 cash flow, taking into account a..
Cells and cancer and mitosis and meiosis : Listen to one (1) of the following podcasts listed below: NPR Podcast: Can healthy eating reverse some cancers? Availablehere. Dana Farber Podcast: Sugar and Cancer. Availablehere.
Different refractive index : A beam of light enters from air (a =1.0) into three layered surface. Each layer has different refractive index. Trace the path of the light beam as it goes through each layer.

Reviews

Write a Review

Financial Management Questions & Answers

  Replaced to get the current ratio to the target level

Muscarella Inc. has the following balance sheet and income statement data: Cash $ 14,000 Accounts payable $ 42,000 Receivables 70,000 Other current liabilities 28,000 Inventories 210,000 Total CL $ 70,000 Total CA $294,000 Long-term debt 70,000. Assu..

  Prevent fraudulent conduct in investment markets might deter

In light of the securities fraud committed by Bernard Madoff and others, write an essay of one to two pages indicating what the SEC could have or should have done to prevent this type of fraud. In your essay indicate whether the failure of the SEC to..

  Expected return-standard deviation of investors portfolio

Two companies Amber and Bolt are manufacturers of glass. The securities of the companies are listed and traded in the New York Stock Exchange. An investor’s portfolio consists of these two securities in the proportion of 5/6 and 1/6 respectively. Cal..

  Similar bonds with no allowance for inflation

What effect do you think the inflation-adjusted interest rate has on the cost of an I-bond in comparison with similar bonds with no allowance for inflation?

  What is price paid to bondholder if the issuer calls bond

A 6 percent corporate coupon bond is callable in five years for a call premium of one year of coupon payments. Assuming a par value of $1,000, what is the price paid to the bondholder if the issuer calls the bond?

  What is exchange rate between swedish krona and dollar

Suppose the exchange rate between the U.S. dollar and the Swedish krona is 10 krona = $1.00, and the exchange rate between the dollar and the British pound is £1 = $1.50. What is the exchange rate between the Swedish krona and the British pound? ____..

  What is the maximum dollar purchase you can make

You have $30,000 and decide to invest on margin. If the initial margin requirement is 60 percent, what is the maximum dollar purchase you can make?

  Compensating balances

Compensating balances: A. Are used to finance inventories B. Earn high rates of interest for the firm C. Are ordered monthly (or quarterly) following forecasts based on cash budget analysis to compensate for shortfalls D. Increase the effective inter..

  What is cash value of this annuity due at the end of year

At the beginning of each period for 10 years, Merl Agnes invests $500 semi annually at 6%. What is the cash value of this annuity due at the end of year 10?

  Comprehensive financial analysis of a public corporation

Would you invest your financial capital in the selected firm as a shareholder and would you invest your human and intellectual capital in the firm as an employee?

  Net difference between the cost and benefit

An investor has the opportunity to buy a $10,000 government bond which is guaranteed to yield 6.5% interest in one year's time. The investor decides to make the investment as there is a net difference between the cost and benefit. Which of the follow..

  Homeowners debt payments to take home pay ratio

Experts advise that your debt payments to take home pay ratio should not exceed 20%. A homeowner has the following monthly income and expenses: What is the homeowner's "debt payments to take home pay" ratio?

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