Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Financial Management Expert

problem: The Tiger Company has an opportunity to make an investment with the following estimated after tax cash flows:

Year                    ATCE
0                         -10,000,000
1                          2,000,000
2                          2,000,000
3                          2,500,000
4                          3,500,000
5                          600,000
6                          5,000,000

The company’s required rate of return on such investments id 10%.

(A) find out payback period, internal rate of return (IRR), net present value (NPV), and profitability index (PI) for this investment?

(B) What is the IRR, and what is its relationship to the NPV and the PI?

(C) Which of the two approaches present value or future value does a financial manager rely on most often? Why?

problem: Two mutually exclusive projects have projected cash flows as follows:

Years    Project A    Project B
0          -800           -800
1          400             0
2          400             0
3          400            1324

(a) Compute the net present value of each project at a discount rate of 10%.

(b) Compute the internal rate of return for each project.

(c) Graphically illustrate the present value profile of the two projects.

(d) Which project would you select? Why? What assumptions are inherent in your decision?

problem: The Buccaneer Corporation is considering replacement of its old, fully depreciated computer. Two new models are available. Computer A has a cost of $108,300 a five years expected life, and after tax cash flows (labor savings) of $29,100 per year. Computer B has a cost of $172,000, a ten-year life, and after tax cash flows of $31,700 per year. No new technological developments are expected, but computer prices are falling because of competition from imports. In five years, computer prices are expected to be 25% less than current prices. The cost of capital is 12%. If the replacement is to be made, it must be done now. Should the company make the replacement, and if so, with A or B? Why?

(i) Draw cash flow time lines for Computer A and Computer B.

(ii) find out the NPV’s on Computer A and Computer B.

(iii) On the basis of their respective NPV’s should the company invest in Computer A or Computer B?

(iv) Is there anything that you can identify that may cause some difficulty in making this decision based on the Internal Rates of Return (IRR’S0.

problem: On completion of MBA, Eddie and Mike were so pleased with the amount of useful and interesting knowledge that they had learned that they convinced some friends who are wealthy alums to create a scholarship. The scholarship will allow three needy students to take the courses in perpetuity. The annual cost of tuition and books for the course is $2000. The university will earn 6% on the fund. The scholarship will be created by a single payment to the university from their friends.

A) How large must the payment be to fund the scholarship?

B) What amount would be needed if the university could earn 9% rather than 6% per year on the funds?

problem: The Bulldog Company can purchase a Tractor for a $14,000 initial investment. The tractor will generate annual after-tax cash inflows of $4, 000 for the next 4 years.

A) What is the Net Present Value (NPV) of the asset if the company’s required rate of return on such assets is 10%?

B) What would the maximum required rate of return (closet whole-percentage rate) that the firm can have and still accept the asset?

Discuss this finding in light of your response to A. above.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M9200
  • Price:- $35

Priced at Now at $35, Verified Solution

Have any Question? 


Related Questions in Financial Management

Hospitality financial management hfm assignment - cvp

Hospitality Financial Management (HFM) Assignment - CVP Analysis You are assisting management consider different cost and pricing strategies. Consider the following data and report to management your findings. 1. The coc ...

Watch the video moral imaginationand answer the following

Watch the video: "Moral Imagination" And Answer the following questions: 1. Can you think of a time when you or someone whom you know used moral imagination? If so, what motivated you (or this individual) to use moral im ...

Topics to choose frombullfailure of the Topics to choose from • Failure of the

Topics to choose from • Failure of the Originate-to-Distribute Model and the Financial Crisis of 2007-8 • Monoline Insurers and the Subprime Financial Crisis and Problems with Rating Agencies • The Liquidity Crisis and t ...

Read through the below post and provide any on of the

Read through the below post and provide any on of the following: APA format 250 Words. . Ask a probing question, substantiated with additional background information, evidence or research. · Share an insight from having ...

Assignmentq1xyz company uses anbspperiodic inventory system

Assignment Q1. XYZ Company uses a periodic inventory system. The beginning balance of inventory and the purchases made by XYZ during the month of July are given below: Date Description Units Unit cost Total cost July 01 ...

Assignmentp6-8nbsprisk-free rate and risk

Assignment P6-8  Risk-free rate and risk premiums   The real rate of interest is currently 3%; the inflation expectation and risk premiums for a number of securities follow. Inflation expectation Security Premium Risk pr ...

Situationthe law affects the business environment and every

Situation The law affects the business environment and every single business and organization. These laws and regulations often come to light in current events as businesses find themselves represented in the press, eith ...

Project risk finance and monitoring assignment -

Project risk, finance, and monitoring Assignment - Report Assessment Description - In this assessment in Part A students are asked to imagine they have been engaged by an external client to develop a report on key aspect ...

Phenomenology assignmentimportantplease use level 1 headers

PHENOMENOLOGY ASSIGNMENT IMPORTANT: Please use Level 1 Headers in your paper so that I can easily discern what part of the assignment you are addressing. Since there are 5 questions in this assignment, you would need 6 L ...

Exercise benefits us in so many ways including improving

Exercise benefits us in so many ways, including: improving our physical and mental health; reducing our risk of cardiovascular disease; increasing our energy, stamina, strength, and agility; promoting better sleep; impro ...

  • 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

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As