Homework Answers
NPV will be
=initial investment including issue costs+CF/(ke-g)
=(-900-15)+100/(10%-3%)
=513.57 million
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Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $100 million each...
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $45 million each...
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $45 million each year, and expects these to grow at 3% each year. The upfront project costs are $380 million and Ford's weighted average cost of capital is 10%. If the issuance costs for external finances are $10 million, what is the net present value (NPV) of the project? O A. $278 million O B. $253 million O C. $266 million OD. $228 million
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $60 million each...
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $60 million each year, and expects these to grow at 4% each year. The upfront project costs are $420 million and Ford's weighted average cost of capital is 10%. If the issuance costs for external finances are $15 million, what is the net present value (NPV) of the project? O A. $509 million OB. $565 million O C. $593 million OD. $622 million
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $50 million each...
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $50 million each year, and expects those to grow at 5% each year. The uplront project costs are $420 million and Ford's weighted average cost of capital is 9% If the issuance costs for external finances are $15 million, what is the not present value (NPV) of the project? O A. $734 million OB. 5856 million O C. $897 million OD. $815 million Consider the following average...
New Flyer Industries has decided to expand its production of hybrid transit buses. The firm expects...
New Flyer Industries has decided to expand its production of hybrid transit buses. The firm expects incremental cash flows of $40 million per year for the next 10 years. The upfront cost of the expansion is $150 million and there are additional issuance costs for external financing of $15 million. If the New Flyer's WACC is 7.5%, what is the NPV of the project? O A. S125 million O B. S110 million O C. $219 million O D. $95 million...
The cash flows associated with an investment project are an immediate cost of $2300 and benefits of $1200 in one year,...
The cash flows associated with an investment project are an immediate cost of $2300 and benefits of $1200 in one year, $800 in two years, and $2000 in three years. The cost of capital (WACC) is 10%. What is the project's NPV? Your Answer: Answer Hide hint for Question 6 NPV is the sum of the discounted cash flows. A firm is considering a potential investment project that would result in an immediate loss in free cash flow of $116...
A project requires a $12 million initial investment and has expected after-tax cash flows of $2...
A project requires a $12 million initial investment and has expected after-tax cash flows of $2 million in perpetuity. The weighted-average cost of capital is 15%. what is the project's net present value (NPV)? a. $13.33 million b. $93.33 million c. $66.67 million d. $1.33 million
If an independent project with conventional, or normal, cash flows is being analyzed, the net present...
If an independent project with conventional, or normal, cash flows is being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree Projects Y and Z are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. NPV (Dollars Year Project Y Project Z 800 -$1,500 -$1,500 0 $200 $900 1 600 Project Y $400 $600 2 $600 $300 400 $1,000 $200 4 Project Z 200 If the weighted average cost of capital...
1) A machinery upgrade project will cost $14 million, and produce cost savings of $1 million...
1) A machinery upgrade project will cost $14 million, and produce cost savings of $1 million in perpetuity. What is the project NPV if the required rate of return is 11%? Enter answer in millions, to two decimal places. 2) Your company is considering a project that requires an initial investment of $12 million, and is expected to produce cash flows of $4 million each year for 10 years. At the end of year 11, the project will require site...
Project S has a cost of $15,000 and is expected to produce benefits (cash flows) of...
Project S has a cost of $15,000 and is expected to produce benefits (cash flows) of $3,000 per year for 6 years. Calculate the project's Net Present Value (NPV) assuming a cost of capital of 15%. -$5,734 -$1,675 -$3,647 -$814 $3,000
4. Project S has a cost of $10,000 and is expected to produce cash flows of...
4. Project S has a cost of $10,000 and is expected to produce cash flows of $3000 per year for 5 years. Project L has a cost of $25,000 and is expected to produce cash flows of $7400 for 5 years. Calculate the NPV and IRR of the two projects assuming a cost of capital of 12%. Which project would you select, assuming they are mutually exclusive, using each ranking method?
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $45 million each year, and expects these to grow at 3% each year. The upfront project costs are $380 million and Ford's weighted average cost of capital is 10%. If the issuance costs for external finances are $10 million, what is the net present value (NPV) of the project? O A. $278 million O B. $253 million O C. $266 million OD. $228 million
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $60 million each year, and expects these to grow at 4% each year. The upfront project costs are $420 million and Ford's weighted average cost of capital is 10%. If the issuance costs for external finances are $15 million, what is the net present value (NPV) of the project? O A. $509 million OB. $565 million O C. $593 million OD. $622 million
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $50 million each year, and expects those to grow at 5% each year. The uplront project costs are $420 million and Ford's weighted average cost of capital is 9% If the issuance costs for external finances are $15 million, what is the not present value (NPV) of the project? O A. $734 million OB. 5856 million O C. $897 million OD. $815 million Consider the following average...
New Flyer Industries has decided to expand its production of hybrid transit buses. The firm expects incremental cash flows of $40 million per year for the next 10 years. The upfront cost of the expansion is $150 million and there are additional issuance costs for external financing of $15 million. If the New Flyer's WACC is 7.5%, what is the NPV of the project? O A. S125 million O B. S110 million O C. $219 million O D. $95 million...
The cash flows associated with an investment project are an immediate cost of $2300 and benefits of $1200 in one year, $800 in two years, and $2000 in three years. The cost of capital (WACC) is 10%. What is the project's NPV? Your Answer: Answer Hide hint for Question 6 NPV is the sum of the discounted cash flows. A firm is considering a potential investment project that would result in an immediate loss in free cash flow of $116...
If an independent project with conventional, or normal, cash flows is being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree Projects Y and Z are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. NPV (Dollars Year Project Y Project Z 800 -$1,500 -$1,500 0 $200 $900 1 600 Project Y $400 $600 2 $600 $300 400 $1,000 $200 4 Project Z 200 If the weighted average cost of capital...
4. Project S has a cost of $10,000 and is expected to produce cash flows of $3000 per year for 5 years. Project L has a cost of $25,000 and is expected to produce cash flows of $7400 for 5 years. Calculate the NPV and IRR of the two projects assuming a cost of capital of 12%. Which project would you select, assuming they are mutually exclusive, using each ranking method?
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