Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The CFO of Northern Petroleum Plc is preparing a presentation to her fellow directors to consider investment into a new project in Detriot that would cost $162.5m.
To finance the project $42.7 million is available as a soft 3-year development loan offered at a rate of interest discounted by 3.62% from the rate Northern Petroleum would normally pay. $59.1 million would be funded by internally generated funds. The balance of funding would be borrowed via a 3-year term loan at a rate of 7.58%.
Northern Petroleum has a pre-tax cost of capital of 9%. It also pays corporation tax at 18% and can claim writing down allowances at 30% in the first year and 20% thereafter on a reducing balance basis.
It would generate pre-tax cash inflows of $64.15 million per year over the investment's 3-year life resulting in a $39.2 million residual value at the end of year 3.
Required:
(A) Calculate the Adjusted Present Value of the above investment and advise the Northern Petroleum CFO as to whether the investment should be accepted.
(B) Having given your advice, the CFO of Northern Petroleum questions why you have used the APV method to evaluate the investment rather than the Net Present Value approach using the Weighted Average Cost of Capital as your discount rate. Explain the advantages of APV and disadvantages of WACC.
Basically, what determines whether a bankrupt company is reorganized or liquidated?
lithium inc. is considering two mutually exclusive projects a and b. project a costs 95000 and is expected to generate
Differentiate between a foreign transaction and a foreign currency transaction. Please give an example of each.
A corporation has a beta of 1.3. The risk free interest rate today is 8 percent and the return on a market portfolio of stocks is 14 percent.
what is a final
If the weighted average cost of capital is 17%, what is the firm's value of operations, in millions?
How much will Fruit of the Loom receive if it sells the banker's acceptance? What is the all-in cost of the acceptance, including Paribas' acceptance fee?
What does a low incidence study mean? This is a short response for a Marketing Research course at FIU
Calculate the NPV, IRR, and PI for both projects. Rank the projects based on their NPVs, IRRs, and PIs. Do the rankings in part b agree or not? If not, why not?
The current exchange rate is $1.60 = €1.00. Company "A" is in Milan, Italy and wishes to borrow $1,000,000 at a floating rate for 5 years and company "B" is a U.S. firm that wants to borrow €625,000 for 5 years at a fixed rate of interest. You are a ..
What stakeholders are most interested in the financial condition of a healthcare business?
Brandy's Candies paid $23 million in dividends during 2003, while also making common stock repurchase of $27 million. What was the cash flow to stockholders.
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd