With capital budget-company wide return on assets

Assignment Help Financial Management

Reference no: EM131047766

Consider the following projects:

A With a start-up cost of $2, benefits of $5 per year for one year and an internal rate of return of 150.00%

B With a start-up cost of $3, benefits of $2 per year for three years and an internal rate of return of 44.63%

C With a start-up cost of $5, benefits of $4 per year for three years and an internal rate of return of 60.74%

D With a start-up cost of $6, benefits of $2 per year for six years and an internal rate of return of 24.29%

(a) With a capital budget of $9 and a company wide return on assets of 10%, which of these projects would you undertake?

(b) What would your answer be if you had access to an outside line of credit at 28% per year?

Reference no: EM131047766

Questions Cloud

Income-tax treatment of ira contributions and distributions : A traditional IRA and a Roth IRA have both similarities and differences. Compare and contrast (1) a traditional IRA with (2) a Roth IRA with respect to each of the following:

What is nominal yield to maturity and nominal yield to call : A firm's bonds have a maturity of 12 years with a $1,000 face value, have an 11% semiannual coupon, are callable in 6 years at $1,214, and currently sell at a price of $1,377.14. What is their nominal yield to maturity? What is their nominal yield to..

Travis eligible to establish a roth ira : Travis, age 25, graduated from college and obtained a position as a tax accountant. He is ineligible to participate in his employer's retirement plan for one year.

Yield to maturity and future price : A bond has a $1,000 par value, 10 years to maturity, and a 8% annual coupon and sells for $980. What is its yield to maturity (YTM)? Assume that the yield to maturity remains constant for the next 4 years. What will the price be 4 years from today?

With capital budget-company wide return on assets : With a start-up cost of $2, benefits of $5 per year for one year and an internal rate of return of 150.00%. With a capital budget of $9 and a company wide return on assets of 10%, which of these projects would you undertake? What would your answer be..

An equity-indexed annuity and a variable annuity : An equity-indexed annuity and a variable annuity are both similar and different in many respects. a. Explain the major similarities between an equity indexed annuity and a variable annuity.

Provide lifetime income to annuitants : Although both fixed and variable annuities can provide lifetime income to annuitants, they differ in important ways. Compare and contrast (1) a fixed annuity with (2) a variable annuity with respect to each of the following:

Bond valuation-shorter-term bond when interest rates change : An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 8% annual coupon. Bond L matures in 19 years, while Bond S matures in 1 year. What will the value of the Bond S be if the going interest rate is 5%? Why does ..

Identify how his interface that uses smart handheld devices : Your journal task is to identify how the HIS interface that uses the smart handheld devices can be aligned with the organization's existing business processes

User Account

All Pages