Analyzing a project with an initial cost

Assignment Help Financial Accounting

Reference no: EM13826131

Antonio's is analyzing a project with an initial cost of $46,000 and cash inflows of $27,000 a year for 2 years. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. The firm uses only debt and common stock to finance their operations and maintains a debt-equity ratio of 0.9. The pre-tax cost of debt is 9.2 percent and the cost of equity is 12.1 percent. The tax rate is 34 percent. What is the projected net present value of this project?

$14,791.34

$1,338.87

$883.65

$43,503.95

$4,021.78

Reference no: EM13826131

Questions Cloud

Computation of annual value-present value of cash flow : The cash flow for an engineering project is given below:

Nursing applying ethical and legal principles to resolve : Nursing Applying Ethical and Legal Principles to Resolve Ethical Dilemma in Nursing

Assumption of the dividend growth model : Which one of the following is an underlying assumption of the dividend growth model?

Challenges of conducting an orientation meeting : This question related to HR Management and it is about virtual team management. The difficulties in conducting team orientation meeting virtually rather than face-to-face have been described in the solution and how to overcome these difficulties h..

Analyzing a project with an initial cost : Antonio's is analyzing a project with an initial cost of $46,000 and cash inflows of $27,000 a year for 2 years. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. The firm uses only debt a..

Firms weighted average cost of capital : The Auto Group has 1,000 bonds outstanding that are selling for $950 each. The company also has 9,400 shares of preferred stock at a market price of $70 each. The common stock is priced at $65 a share and there are 40,000 shares outstanding. What is ..

Estimated values of the yearly atcf : The estimated values of the yearly ATCF (after tax cash flows) of a Project are given in the Table below. The duration of the Project is six years. The initial cost of the Project is $2,800,000. MARR (the minimum attractive rate of return) is 12%.

Preferred stock outstanding that is currently selling : Jensen's Travel Agency has 11 percent preferred stock outstanding that is currently selling for $38 a share. The market rate of return is 15 percent and the firm's tax rate is 34 percent. What is Jensen's cost of preferred stock?

Identifying symptoms or signs of pneumonia : Identifying Symptoms Or Signs Of Pneumonia

User Account

All Pages