What is the project worth

Assignment Help Financial Management

Reference no: EM131241311

You can take a $1 million project. However, this kind of project is ordinary income for you, and it will produce either nothing or $3 million next year, both with equal probabilities. Assume that your taxable opportunity cost of capital is 10% and your combined tax rate is 35%. Your after-tax cost of capital is thus 6.5%.

(a) What is the project worth? Assume that you could fully use tax losses to offset other income taxed at 35%, too.

(b) How would your answer change if you could not use the tax losses elsewhere?

Reference no: EM131241311

Questions Cloud

Explain the task management of a time-triggered system : Why is it not recommended to use standard workstation operating systems for hard real-time applications? Explain the task management of a time-triggered system versus that of an event-triggered operating system.

What is the pv of the tax savings from financing the project : If other equivalent firms are offering investors expected rates of return of 10%, what is the PV of the tax savings from financing the project with a mortgage?

Electric field strength between the disks : Two 12-cm-diameter charged disks face each other, 25 cm apart. Both disks are charged to - 50 nC . What is the electric field strength between the disks, along their common axis, at a point 5.0 cm from one disk? Express your answer to two signific..

Stimate the mttf of the power system in your neighborhood : Give an example of a fault-tolerant sensor. Estimate the MTTF of the power system in your neighborhood.

What is the project worth : What is the project worth? Assume that you could fully use tax losses to offset other income taxed at 35%, too. - How would your answer change if you could not use the tax losses elsewhere?

What are characteristics of fail-silent actuators and tmr : What are accuracy limits of an analog control signal in typical industrial applications? Sketch a software routine for a field bus node that will eliminate the contact bounce. What are the characteristics of fail-silent actuators and TMR actuators..

If the firm is fully equity financed what is its value : If the firm is fully equity-financed, what is its value? - Using APV, if the firm is financed with equal amounts of debt and equity today, what is its value?

How long will it take for the apple to reach the ground : (a) How long will it take for the apple to reach the ground? (b) How far from the side of the road does the apple land? (c) How far along the road does the apple travel from the time it is thrown to the time it lands?

Which you will develop a marketing pr or branding plan : Where are thery and what are they doing now: consumer needs and desires they try to satisfy, marketing and PR strategies, other sepecific strategies they used to build their branding. What they are good at, why those worked or not worked, and wha..

User Account

All Pages