Project A is expected to produce CF - $ 219 for each of 6 years, with additional 59$ income for selling the factory at the end of the 6 years. It is purely equity financed. Given a risk free rate of a 0 %, market premium of 12% and beta of 2.4, what is the PV of the project ? A.900.0 B.549.0 C.6068 D.1011.0

Project A is expected to produce CF - $ 219 for each of 6 years, with additional 59$ income for selling the factory at the end of the 6 years. It is purely equity financed. Given a risk free rate of a 0 %, market premium of 12% and beta of 2.4, what is the PV of the project ? A.900.0 B.549.0 C.6068 D.1011.0

Name: Project A is expected to produce CF - $ 219 for each of 6 years, with
Uploaded: 2024-03-20T06:50:59.000Z
Channel: Bartleby
Description: Project A is expected to produce CF - $ 219 for each of 6 years, with additional 59$income for selling the factory at the end of the 6 years. It is purely equity financed.Given a risk free rate of a 0 %, market premium of 12% and beta of 2.4, what i

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 14P

See similar textbooks

Similar questions

Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
An equipment with a cost of P 100 000 is expected to generate returns of P 90 000; P 60 000 and P 50 000 for the first, second and third year, respectively. Using a discount rate of 12%, what is the NPV of the project? а. Р 60 121 b. Р 79 341 c. P 83 431 d. P 63 778
Tomodachi Co plans to invest in either Projects M or N which are described below. The company's cost of capital is 15%, the market return is 15% and the risk-free rate is 5%. The beta for project M is 1.20 and the beta for project N is 1.40. What is the NPV for Project M when using the risk-adjusted discount rate method of project evaluation? Initial Investment Project M $700,000 Project N $780,000 Year 1 $300,000 $220,000 2 $300,000 320,000 3 $300,000 380,000 4 $300,000 460,000 or You must decide firm which of the proposed projects should be accepted for the upcoming year since only $6 million is available. Which projects should be accepted?
A project is estimated to cost P120T, last 8 years & have a salvage value of P20T. The annual gross income is expected to average P40k & annual expenses is P6T. If capital is earning 12% determine if this a desirable investment using rate of return. What is your computed ROR? Select one: a. 20.07% b. 21.07% c. 17.17% d. 23.17%
Salalah Wind Energy has taken up a new project with an initial investment of 50000 OMR.The expected future cashflow from the project over the next three years will be 22500 OMR, 23500 OMR and 24500 OMR.What is the profitability index if the discount rate is 7 percent? Select one: O a. 1.48 O b. 1.23 O c. 1.44 O d. 1.63 O e. None of these
Johnson Controls has a project with a cost of $7,000 and expected cash flow of stream of $2,000 at the end of year 1, $3,000 at the end of year 2, and $5,000 at the end of year 3. At a discount rate (WACC) of 12.08% what is the net present value (NPV) of this investment?Your answer should be between 7.32 and 16.60, rounded to 2 decimal places, with no special characters.
A company has a project with initial investment is $40,000. It will generate $15,000 annually for the next four years. Assume that this company and its project have a beta of 2.0, the risk-free rate of return (i.e., R is 296, and the market return (Le., R is 796?. How much is the NPV of this project? [Hint: As discussed, the CAMP model can be used to estimate discount rate (r) in the NP analysis equation]. A) 5,555 B) 3,333 C) 4,444 D) 6,666
Project X requires an initial outlay of sh.500, 000 and has a profitability index of 1.4. The project is expected to generate equal annual cash flows over the next ten years. The required return for this project is 16%. What is project X’s internal rate of return? Select one: A. 19.88% B. 26.12% C. 24.78% D. 22.69%
A company has a project with initial investment is $40,000. It will generate $15,000 annually for the next four years. Assume that this company and its project have a beta of 2.0, the risk-free rate of return (i.e., Rm) is 2%6, and the market return (i.e., Rm) is 7%6?. How much is the NPV of this project? [Hint: As discussed, the CAMP model can be used to estimate discount rate (r) in the NPV analysis equation). A) 5,555 B) 3,333 4,444 D) 6,666
0.5.10 A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using (a) tabulated factors, and (b) a spreadsheet. Table Summary: A table divided into two columns shows the items to consider for obtaining the annual cost of the project in the first column, and the numeric value of the items in the second column. First cost, $ -800,000 Equipment replacement cost in year 2, $-300,000 Annual operating cost, $/year Salvage value, $ Life, years -950,000 250,000 4
Find the Annual Equivalent Worth AEW for the indefinite project described by (jo» ND-), G, Nc-l»? Assume a MARR of 12% for the project. For the defender, the AEC are described below on the left side. For the challenger, the AEC are described on the right side. 5400 N=1 5100 5350 N=2 4900 5200 N=3 4800 5300 N=4 5300 5500 N=5 5900
You are considering an investment opportunity that requires an initial investment of $150 million in period 0. The project will generate only one future payment of $168 million at the end of the first year. The cost of capital is 8% . What is the IRR for the project? [Note that getting the actual value should not require trial and error or a financial calculator, because this is a simple case.] A. 114% B. 8% C. 20% D. 12% E. 10.7% F. 5.6% G. 14% H. 112%