The following is a forecast of net cash thrown off from a business. You require a 12% return on your money. What is the maximum price you would pay for this business. $550 Each year for the next 5 years. What is the purchase price. Please show how you did it in excel so I can do it
Hence, Purchase price is $1,982.63
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The following is a forecast of net cash thrown off from a business. You require a...
Alternatives A and B require investments of $10,310 and $13,400, respectively. Their respective net annual cash inflows are $3,300 and $4,000. a) What is the rate of return for each alternative and for the incremental difference? (Do not use Excel, and please show all steps) b) If the interest rate is 10%, which alternative should be selected? (Do not use Excel, and please show all steps)
Your neighborhood self-service laundry is for sale and you consider investing in this business. For the business alone and no other assets (such as building and land), the purchase price is $240,000. The net cash flows for the project are $30,000 per year for the next 5 years. You plan to borrow the money for this investment at 5%. Prepare a net present value calculation for this project. What is the net present value of this project? Calculate the simple...
You can purchase an asset today for $10,000. If you purchase the asset, you will receive a net incremental cash flow of $1600 at the end of each of the next 10 years. What is the Internal Rate of Return and Net Present value with a discount rate of 8%? Please show in excel. Thank you!
5 Consider the investment project with the following net cash flows: Year Net Cash Flow 0 $1,500 SX $650 SX What would be the value of X if the project's IRR is known to be 10%? The annual income from a rented house is $24,000. The annual expenses are $6000. If the house can be sold for $245,000 at the end of 10 years, how much could you afford to pay for it now, if you considered 900 to be...
You are considering a project that promises you cash flows of 554 USD each year for 3 years. Based on the riskiness of the project, you require a 12 percent return. What is the maximum you should be willing to pay? You are considering a project that promises you cash flows of 508 USD each year for 5 years. Based on the riskiness of the project, you require a 12 percent return. The cost to buy into the project is...
Step 1 Read the scenario. Assume you are thinking about starting a business and would like to forecast your cash needs for the next six months. You expect sales to be approximately $30,000 per month for the first 12 months and your purchases to support sales will be approximately 60% of sales. You anticipate about 20% of your sales will be cash and 80% collected the following month. Your supplier has agreed to extend credit for 70 days at no...
Your company is evaluating a purchase of Skeksis Crystal Mining LLC. Skekis produced free cash flow of $7.3m last year, and this is expected to grow at 11% for the next five years before leveling off to a long term growth rate of 2%. Your company has a cost of capital of 10%, while Skeksis has a cost of capital of 13%. Skeksis has 3 million shares outstanding and $25m in debt. What would be the highest price you would...
Show Excel, please Suppose you are trying to decide whether to purchase a business. You expect that you will be able to collect $4,000,000 in revenue in year 1 and you expect your revenues to increase by 6% each year though year 10. Your costs in year 1 are expected to be $2,400,000 but you expect them to increase by 3% each year thereafter. You believe that you will be able to sell the business after 10 for %24,000,000 at...
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4) You are considering investing in a local business that modifies equipment & sells it to the public at a much higher price. You believe you can sell 4 units/ year with each modified unit selling for $25,000. You estimate the costs: labor & materials $10,000/unit, an initial $10,000 increase in NWC continuing for 4 yrs, lease expense for $15,000/yr, $60,000 in fixed assets (depreciate to zero salvage value) with...
You expect a firm to pay growing dividends (g = 0.02 = 2%). You require a 12% rate of return. If the next dividend will be $2.50, what is the stock price today?