2.The Robertson Firm is considering a project which costs $123,900 to undertake. The project will yield...

Question

Question

Answer 1

Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

A Initial cost Monthly cash inflows No. of months $123,900.00 $4,894.35 30 Monthly rate of return 1.13% Nominal annual rate o

Cell reference -

H17 A Initial cost Monthly cash inflows No. of months 123900 4894.35 30 Monthly rate of return =RATE(C4,-C3,C2,0) Nominal ann

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

Answer 2

Similar Homework Help Questions

The Robertson Firm is considering a project which costs $123,900 to undertake. The project will yield...

The Robertson Firm is considering a project which costs $123,900 to undertake. The project will yield cash flows of $4,894.35 monthly for 30 months. What is the rate of return on this project? how do you do this with a financial calculator (TI-83 Plus), or by hand? NO EXCEL
Your firm is considering a project that costs $56,589. This opportunity will provide cash flows of...

Your firm is considering a project that costs $56,589. This opportunity will provide cash flows of $11.473, $13,222, $15,861, and $10,720 over the next four years. Your firm has a required rate of return of 7%. What is the project's npv?
Your firm is considering a project that costs $64,988. This opportunity will provide cash flows of...

Your firm is considering a project that costs $64,988. This opportunity will provide cash flows of $14,511, $26,263, $15,280, and $28,209 over the next four years. Your firm has a required rate of return of 17%. What is the project's npv?

Your firm is considering a project that costs $85,105. This opportunity will provide cash flows of...

Your firm is considering a project that costs $85,105. This opportunity will provide cash flows of $22,311, $10,601, $24,904, and $22,165 over the next four years. Your firm has a required rate of return of 14%. What is the project's profitability index?
Your firm is considering a project that costs $93,996. This opportunity will provide cash flows of...

Your firm is considering a project that costs $93,996. This opportunity will provide cash flows of $33,164, $18,441, $11,841, and $30,152 over the next four years. Your firm has a required rate of return of 11%. What is the project's profitability index?
A firm is considering an investment project that costs $250,000 today and $250,000 in one year,...

A firm is considering an investment project that costs $250,000 today and $250,000 in one year, but would produce benefits of $50,000 a year, starting in one year, forever. What is the NPV of this investment project if the firm applies an annual discount rate of 7.1% to all future cash flows?

A firm is considering an investment project that costs $250,000 today and $250,000 in one year,...

A firm is considering an investment project that costs $250,000 today and $250,000 in one year, but would produce benefits of $50,000 a year, starting in one year, forever. What is the NPV of this investment project if the firm applies an annual discount rate of 6.9% to all future cash flows? Your Answer: Answer
15. A firm is considering a new venture that would cost $3.5million, which is expected to...

15. A firm is considering a new venture that would cost $3.5million, which is expected to yield $1.2 million in annual profits (each year) for the next four years. The current interest rate is 3%. The firm should: a.) undertake the project regardless of the interest rate. b.) invest in this new venture because the present value of net gain would be $960,000 (approx.) c.) invest in this new venture because the present value of net gain would be $660,000...
A firm is deciding on whether to undertake an internal investment project with a return of...

A firm is deciding on whether to undertake an internal investment project with a return of 9%. The company beta is 1.3, the risk free rate is 2% and the market rate is 7%. Use CAPM to decide whether or not to undertake this investment. Clearly justify you answer. Following the analysis you are now told that the firm is both small and has a high book-to-market ratio. How might your advice change?

2) KAYNE Inc. is considering a new project that costs $50 million. The project will generate...

2) KAYNE Inc. is considering a new project that costs $50 million. The project will generate after-tax (year-end) cash flows of $10 million for the first three years (t = 1, 2, 3), $13 million for the following two years (t = 4, 5), and $12.5 million for the last three years (t= 6, 7, 8). The firm has a debt-equity ratio of 0.50. This firm has a beta of 1.8 and its cost of debt is 10 percent. Suppose...