Cash flow-indifferent in accepting project and rejecting

Assignment Help Financial Management
Reference no: EM131054674

A project that provides annual cash flows of $16,300 for eight years costs $69,000 today. What is the NPV for the project if the required return is 7 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) NPV $ At a required return of 7 percent, should the firm accept this project? Accept Reject What is the NPV for the project if the required return is 19 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ At a required return of 19 percent, should the firm accept this project? Accept Reject

At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Discount rate %

Reference no: EM131054674

Questions Cloud

Gallery expects to bring in additional cash flows : Cortez Art Gallery is adding to its existing buildings at a cost of $2 million. The gallery expects to bring in additional cash flows of $520,000, $700,000, and $1,000,000 over the next three years. Given a required rate of return of 10 percent, what..
What is the current yield and interpret the current yield : Wilson Wonders’ bonds have 12 years remaining to maturity. Interest is paid semiannually, the bonds have $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $850. a. What is the yield to maturity for this bond? b. What..
What is price of stock-expected long-run growth rate : X-Terra stocks just paid a dividend of $2.00 per share (i.e., D0=2.0). If the expected long-run growth rate for this stock is 5%, and if investors require 19% return, what is the price of the stock?
Another utilization of cash flow analysis-bid price : Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus the bid price represents a financial break-even level for the project...
Cash flow-indifferent in accepting project and rejecting : A project that provides annual cash flows of $16,300 for eight years costs $69,000 today. What is the NPV for the project if the required return is 7 percent? Accept Reject What is the NPV for the project if the required return is 19 percent?  NPV $ ..
What is the IRR of the decision to keep the old machine : A firm is considering an investment in a new machine with a price of $18.2 million to replace its existing machine. The current machine has a book value of $6.2 million and a market value of $4.7 million. The new machine is expected to have a four-ye..
What should be the coupon rate of the bonds : Ten years ago, News Corp. raised capital by issuing 20-year quarterly coupon bonds with $1,000 par value. a. If investors required 12% return, quarterly compounding, for News Corp.’s bonds when the bonds were issued ten years ago, what should be the ..
What is the future value of this prize : The Florida lottery agrees to pay the winner 256,000 at the end o each year for 20 years. What is the future value of this prize if each payment is put in a account earning0.10
Chocolate and more offers bond with coupon rate : Chocolate and more offers a bond with a coupon rate of 6 percent, semi-annual payments, and a yield to maturity of 7.73 percent. the bonds mature in 9 years. What is the market price of a 1,000 face value bond?

Reviews

Write a Review

Financial Management Questions & Answers

  Basis of cash expenditures related to fixed costs

Air Purifier Inc. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $2,450,000, but 15 percent of this value is represented by depreciation. Its contribution margin (price minus..

  Compare the percentage gains and losses

Stock in Cheezy-Poofs Manufactory is currently priced at $50 per share. A call option with a $50 strike and 90 days of maturity is quoted at $1.95. Compare the percentage gains and losses from a $97,500 investment in the stock versus the option in 90..

  What is the geometric return

Your stock investments return 8%, 12%, and -4% in consecutive years. What is the geometric return?. What is the sample standard deviation of the above returns?

  Potential methods of modifying end-of-year-six cash flow

You are considering an investment in a new sub-industry of interest to your firm. To understand the importance of terminal value assumptions you have decided to calculate NPV under two different sets of assumptions. The appropriate discount rate for ..

  Calculate the present value of cash flows

Suppose that a firm’s recent earnings per share and dividend per share are $3.50 and $2.50, respectively. Both are expected to grow at 7 percent. However, the firm’s current P/E ratio of 16 seems high for this growth rate. Compute the dividends over ..

  What is the average accounting return

A project has an initial cost of $70,000 and a four-year life. The company uses straight-line depreciation to a book value of zero over the life of the project. The projected net income from the project is $2,800, $4,300, $4,900, and $4,500 a year fo..

  What is your estimate of stock bs price

The current dividend is $1.50, its current price is $15.90. You are an analyst and believe that the required return on Stock B is the same as that on Stock A. If Stock B pays a constant dividend of $ 2, what is your estimate of Stock B's price?

  Perpetuity value

Given an interest rate of 4 percent per year, what is the value at date t = 5 of a perpetual stream of $2,400 payments that begins at date t = 10?

  Cash basis taxpayer-received a salary

Samantha, a cash basis taxpayer, received a salary of $75,000 during year 1, 2, and 3. Samantha was also awarded a $15,000 bonus that was accrued by her employer, Center Corporation (an accrual basis, calendar year C corporation), in December of year..

  Divide corporation has bonds on the market

Ashes Divide Corporation has bonds on the market with 17 years to maturity, a YTM of 10.0 percent, and a current price of $1,216.50. The bonds make semiannual payments. What must the coupon rate be on these bonds?

  Firms inventory carrying cost is equal

Aberwald Corporation expects to order 126,000 memory chips for inventory during the coming year, and it will use this inventory at a constant rate. Fixed ordering costs are $300 per order; the purchase price per chip is $20; and the firm's inventory ..

  What is the company pretax cost and aftertax cost of debt

Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 108 percent of face value. The issue makes semiannual payments and has an embedded cost of 9 percent annually. Wha..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd