Homework Answers
In case of perpetual cash flow the interest rate is calculated as:
Initial investment = P, say, 1000000
Cash flows after every year = A, say, 100000
Thus, P is 10 times per return A
Now, for perpetuity with infinite period of time
PV = C/r
Where, PV initial investment, C is cash flow per year, r is interest rate.
r = 100000/1000000
= 0.1 or 10%
If the project is terminated after 5 years still the interest rate stays the same at 10%.
Please only do 7A-13 use 6% for financing rate and 12% for the investing rate television...
Please only do 7A-13 use 6% for financing rate and 12% for the
investing rate
television for $9000 down and monthly payments of $500. When he visited the lot, he found it was not something he wanted to own. After 40 months he was finally able to sell the lot. The new owner assumed the balance of the loan on the lot and paid Bill $19,000. What rate of return did Bill receive on his investment? e project, which had...
a. The initial cost of a project is $1 million. The project will run for 5...
a. The initial cost of a project is $1 million. The project will run for 5 years. The required rate of return for the project is 11%. The project will have the following cash flows from year 1 to year 5. Yearl: -200,000, Year 2: -100,000, Year 3: 400,000; Year 4: 300.000: Year 5 400,000 What is the Profitability Index of this project? (Points: 3) show your work b. The initial investment of a project is $600,000. The net cash...
Sandhurst Enterprises has a target debt/equity ratio of 1/3. It has internally generated after tax cash...
Sandhurst Enterprises has a target debt/equity ratio of 1/3. It has internally generated after tax cash flows of $118,000,000. Which can be paid out in whole or in part as dividend? It has a corporate tax rate of 40% and cost of capital of 12%. It is considering the following projects. Project U a perpetual project requires investment of $30,000,000. It will provide before tax cash flow of $6,000,000 one year from today and $6,300,000 two years from today. After...
FCF for Year 0, 1, 2, 3, 4 and 5 NPV? PI? IRR? (Related to Checkpoint...
FCF
for Year 0, 1, 2, 3, 4 and 5
NPV?
PI?
IRR?
(Related to Checkpoint 12.1) (Comprehensive problem-calculating project cash flows, NPV, PI, and IRR) Traid Winds Corporation, a firm in the 31 percent marginal tax bracket with a required rate of return or discount rate of 11 percent, is considering a new project. This project involves the introduction of a new product. The project is expected to last 5 years and then, because this is somewhat of a...
FCF for the following: Year 0: Year 1: Year 2: Year 3: Year 4: Year 5:...
FCF
for the following:
Year 0:
Year 1:
Year 2:
Year 3:
Year 4:
Year 5:
NPV?
PI?
IRR?
(Related to Checkpoint 12.1) (Comprehensive problem calculating project cash flows, NPV, PI, and IRR) Traid Winds Corporation, a firm in the 36 percent marginal tax bracket with a required rate of return or discount rate of 12 percent, is considering a new project. This project involves the introduction of a new product. The project is expected to last 5 years and...
Consider the investment project in the table below with four-year investment life n Project Cash Flow...
Consider the investment project in the table below with four-year investment life n Project Cash Flow ($) 0 -$ 3,500 1 $ 1,600 2 $ 2,800 3 $ 3,500 4 $ 2,200 What is the payback period? (5 points) (show all your work). What is the discounted payback period if the firm’s interest rate is 15% after taxes? (9 points) (show all your work).
Consider a project that requires an initial investment of $98,000 and will produce a single cash flow of $155,000 in 6 years. a. What is the NPV of this project if the 6-year interest rate is 4.9% (EAR)? b. What is the NPV of this project if the 6-year
Consider a project that requires an initial investment of $98,000 and will produce a single cash flow of $155,000 in 6 years.a. What is the NPV of this project if the 6-year interest rate is 4.9% (EAR)?b. What is the NPV of this project if the 6-year interest rate is 10.2% (EAR)?c. What is the highest 6-year interest rate such that this project is still profitable?
Problem 4 Company ABC has an instantaneous investment stream, S(n), over 2 years that can be...
Problem 4 Company ABC has an instantaneous investment stream, S(n), over 2 years that can be represented as a continuous first-degree polynomial function as given in the below figure for Year 1 and Year 2. Part A: If a continuously compounded interest is applied to the instantaneous cash flow investment stream, determine the future worth of the investment at the end of Year 6. Investment Stream $1,000 /year Line = S(n) Investment Stream, $/year Time, years Part B: If the...
Problem 4 Company ABC has an investment stream, S(n), over 2 years that can be represented...
Problem 4 Company ABC has an investment stream, S(n), over 2 years that can be represented as a continuous first degree polynomial function as given in the below figure for year 1 and year 2 (1) If a continuously compounded interest is applied to the instantaneous cash flow investment stream, determine the future worth of the investment at the end of year 6 Investment Stream $1,000 /year Investment Stream, $/year Time, years (2) If the investment stream was abruptly discontinued...
Years 0 1 2 3 4 Investment Outlay Equipment cost ($350,000) Shipping and installation ($70,000) Increase in inventory ($55,000) Increase in ac...
Years 0 1 2 3 4 Investment Outlay Equipment cost ($350,000) Shipping and installation ($70,000) Increase in inventory ($55,000) Increase in accounts payable $18,000 Total initial investment ($457,000) Operating cash flow $ 113,990 $ 96,350 $ 140,450 $ 152,210 Total termination cash flow $ 53,250 Project Cash Flows Net cash flows ($457,000) $113,990 $96,350 $140,450 $205,460 Required return (used as the discount rate) 12% Payback period (2.22) Present value of net cash inflows Present value of cash outflows Profitability index...
Please only do 7A-13 use 6% for financing rate and 12% for the
investing rate
television for $9000 down and monthly payments of $500. When he visited the lot, he found it was not something he wanted to own. After 40 months he was finally able to sell the lot. The new owner assumed the balance of the loan on the lot and paid Bill $19,000. What rate of return did Bill receive on his investment? e project, which had...
a. The initial cost of a project is $1 million. The project will run for 5 years. The required rate of return for the project is 11%. The project will have the following cash flows from year 1 to year 5. Yearl: -200,000, Year 2: -100,000, Year 3: 400,000; Year 4: 300.000: Year 5 400,000 What is the Profitability Index of this project? (Points: 3) show your work b. The initial investment of a project is $600,000. The net cash...
Sandhurst Enterprises has a target debt/equity ratio of 1/3. It has internally generated after tax cash flows of $118,000,000. Which can be paid out in whole or in part as dividend? It has a corporate tax rate of 40% and cost of capital of 12%. It is considering the following projects. Project U a perpetual project requires investment of $30,000,000. It will provide before tax cash flow of $6,000,000 one year from today and $6,300,000 two years from today. After...
FCF
for Year 0, 1, 2, 3, 4 and 5
NPV?
PI?
IRR?
(Related to Checkpoint 12.1) (Comprehensive problem-calculating project cash flows, NPV, PI, and IRR) Traid Winds Corporation, a firm in the 31 percent marginal tax bracket with a required rate of return or discount rate of 11 percent, is considering a new project. This project involves the introduction of a new product. The project is expected to last 5 years and then, because this is somewhat of a...
FCF
for the following:
Year 0:
Year 1:
Year 2:
Year 3:
Year 4:
Year 5:
NPV?
PI?
IRR?
(Related to Checkpoint 12.1) (Comprehensive problem calculating project cash flows, NPV, PI, and IRR) Traid Winds Corporation, a firm in the 36 percent marginal tax bracket with a required rate of return or discount rate of 12 percent, is considering a new project. This project involves the introduction of a new product. The project is expected to last 5 years and...
Problem 4 Company ABC has an instantaneous investment stream, S(n), over 2 years that can be represented as a continuous first-degree polynomial function as given in the below figure for Year 1 and Year 2. Part A: If a continuously compounded interest is applied to the instantaneous cash flow investment stream, determine the future worth of the investment at the end of Year 6. Investment Stream $1,000 /year Line = S(n) Investment Stream, $/year Time, years Part B: If the...
Problem 4 Company ABC has an investment stream, S(n), over 2 years that can be represented as a continuous first degree polynomial function as given in the below figure for year 1 and year 2 (1) If a continuously compounded interest is applied to the instantaneous cash flow investment stream, determine the future worth of the investment at the end of year 6 Investment Stream $1,000 /year Investment Stream, $/year Time, years (2) If the investment stream was abruptly discontinued...
Most questions answered within 3 hours.
-
Push an object with half the mass of the cabinet with a force of
200 N....
asked 3 minutes ago -
Differentiate the application and functions of
electronic medical records, electronic health records and
electronic personal health...
asked 3 minutes ago -
What is the height of the tsunami in a water depth of 10 m
assuming the...
asked 14 minutes ago -
A χ2 goodness-of-fit test was used to test the hypothesis that
students at a local university...
asked 18 minutes ago -
Problem 1
You have a loan outstanding. It requires making three annual
payments at the end...
asked 20 minutes ago -
A database imposes several requirements on the structure of
tables. Which of the following is not...
asked 19 minutes ago -
A
fragment of DNA is amplified from a single molecule of template DNA
for 22 cycles....
asked 30 minutes ago -
Smartphones: A poll agency reports that 32% of teenagers aged
12-17 own smartphones. A random sample...
asked 38 minutes ago -
blood glucose level for obese patient population have
a mean of 100 with a standard deviation...
asked 1 hour ago -
(a) A lightbulb has a resistance of 165 Ω when operating with a
potential difference of...
asked 47 minutes ago -
Questions
Submission Question 2: Stacks
Problem
Write a program that keeps track of where cars are...
asked 47 minutes ago -
Using α = 0.05, test if the mean weight change
is less than 0 if a...
asked 1 hour ago