Channel Tunnel Inc. plans to build an additional 23-mile-long tunnel under the English Channel for added train service. The cost (NINV) of the tunnel is expected to be $4.3 billion. Net cash inflows are expected to equal $764 million per year. How many years must the firm generate this cash inflow stream for investors to earn their required 17 percent rate of return

Midlife Crisis Inc. (MCI) has two assets: epsilon1,60 in cash and an investment project. The cash is invested in the risk-free asset which earns 5% per year. The project requires an investment of £800 today and generates an expected cash flow of £1,600 one year from now. This opportunity recurs perpetually each year. Thus, for example, one year from now MCI can again invest £800 and generate epsilon1,600 one year subsequent to that investment. MCI has 800 shares outstanding. The market equity risk premium is 5% per year, and the investment project has a CAPM beta of 1. Assume a Modigliani and Miller world. When answering this question, state any additional assumptions you may need to make. Show your calculations. (a) Should MCI invest in the project? Explain.  (b) Suppose MCI's CFO decides to pursue the project. What is the value of MCI? (c) Suppose MCI's CFO decides to take the project and always pay out all free cash flow as a dividend. What is MCI's cum-dividend price expected to be…

​(​NPV, ​PI, and IRR calculations​) Fijisawa Inc. is considering a major expansion of its product line and has estimated the following free cash flows associated with such an expansion. The initial outlay would be ​$1,850,000​, and the project would generate incremental free cash flows of ​$600,000 per year for 5 years. The appropriate required rate of return is 9 percent.   a. Calculate the NPV. b. Calculate the PI. c. Calculate the IRR. d. Should this project be​ accepted?

You have been asked to analyze the net present value of building a bridge in Asia. You estimate that building the bridge will cost you $50 million up front and that it will generate $4 million in cash flows next year via toll collection and that these cash flows will grow 10% a year for the following four years (Years 2-5). After year 5, you expect the cash flows to continue to grow at the inflation rate (2%). Assuming a cost of capital of 8%, what is the NPV of this project to you? Would you recommend taking on this project and why?

aa

An investment opportunity requires an immediate cash outlay of $45,000, and then an $80,000 cash outlay two years from now. Net returns of $10,000, $30,000, and $125,000 are expected at the end of each of the next three years, respectively.     What is the investment's net present value if the cost of capital is 12%?

A construction management company is examining its cash flow requirements for the next few years. The company expects to replace software and in-field computing equipment at various times. Specifically, the company expects to spend $5,000 1 year from now, $11,000 3 years from now, and $17,000 each year in years 6 through 10. What is the future worth in year 10 of the planned expenditures, at an interest rate of 13.00% per year? (Round the final answer to three decimal places.) The future worth is determined to be $

Vaughn Inc. is contemplating a capital investment of $84000. The cash flows over the project's four years are: Expected Annual Expected Annual Year Cash Inflows Cash Outflows 1 $31000 $12000 2 44000 19000 3 63000 24000 49000 29000 The cash payback period is

Vijay

We are examining a new project. We expect to sell 6,000 units per year at $74 net cash flow apiece for the next 10 years. In other words, the annual cash flow is projected to be $74 × 6,000 = $444,000. The relevant discount rate is 18 percent, and the initial investment required is $1,710,000. After the first year, the project can be dismantled and sold for $1,540,000. Suppose you think it is likely that expected sales will be revised upward to 9,000 units if the first year is a success and revised downward to 4,600 units if the first year is not a success.   a. If success and failure are equally likely, what is the NPV of the project? Consider the possibility of abandonment in answering. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the value of the option to abandon? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)