Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1) Assume that a company is planning to undertake a project costing $2,000,000. This amount will be depreciated using straight line depreciation over 5 years. The project will result in increased sales of $3,000,000 a year over the next 5 years. The variable costs on increased sales will be 50% of sales and fixed costs will be $800,000 over the next 5 years. The tax rate for the company is 20%. The beta of the company is 1.25; the risk-free rate is 4% and the market risk premium is 8%. Before tax cost of debt is 9%. The company has a target capital structure of 50% debt. Assume that the company will raise the needed funds using equity and debt based on the target capital structure and future cash flows will be discounted using the weighted average cost of capital. find out the adjusted present value.

2) A project costs $100,000 and provides a cash flow of $40,000 every year for the next 4 years. The discount rate is 12%. This project can be taken up today or after one year. If it is taken up after one year, the project cost will increase by $50,000 but the project would provide cash flows of $55,000 a year for 4 years from the time project is taken up. The incremental NPV of delaying the project is:

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M924952

Have any Question? 


Related Questions in Basic Finance

Ethical dilemma mike a recent college graduate opened a

Ethical Dilemma. Mike, a recent college graduate, opened a checking account with a local bank. He asked numerous questions before deciding on this bank, including inquiring about checking account fees and annual credit c ...

For each of the following scenarios identify which sampling

For each of the following scenarios, identify which sampling method is used: a. The State College is conducting a survey of student attitudes and opinions. The plan is to use the list of all registered students and rando ...

A an investor buys european call on a share for sh 5 the

a) An investor buys European call on a share for sh 5. The share price is sh 90 and the strike price is sh 85. Under which circumstances does the investor make profit? When will the option be exercised? Draw a diagram to ...

A very thin polymeric coating of thickness 01 mm uniformly

A very thin polymeric coating of thickness 0.1 mm uniformly coats a rectangular surface. The rectangular surface has a length of 20 cm and a width of 10 cm. the coating contains a solvent that must be evaporated away fro ...

1 how does the cost of canying inventory impact the

1. How does the cost of canying inventory impact the traditional earnings statement of the enterprise? 2. Discuss the relationship between service level, uncertainty, safety stock, and order quantity. How can trade-offs ...

1 what do you see as the biggest challenges in conducting a

1. What do you see as the biggest challenges in conducting a brand audit? What steps would you take to overcome them? 2. Pick a brand. See if you can assemble a brand inventory for it.

1 what are some important lease provisions which investors

1. What are some important lease provisions which investors should be aware of when analyzing the financial statements of REITs? 2. List and characterize equity REITs based on their property types.

Stock pricing stock valuation bond pricesbullgo to

STOCK PRICING / STOCK VALUATION / BOND PRICES • Go to www.cnbc.com and explore the video tab by using several different key terms such as stock pricing, stock valuation, and bond prices. • Watch at least two videos you f ...

Investigators studying the mass transfer from single

Investigators studying the mass transfer from single spheres recommended the generalized equation As discussed in section 30.1, the value of 2 can be derived theoretically by considering the molecular diffusion from a sp ...

Marks inc expect a dividend of 520 per share in one year

Marks, Inc., expect a dividend of $5.20 per share in one year from now. The rate of return is 13% and the growth rate is 6.8%. How much would you be willing to pay for Marks' stock today? If the current market price of M ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen