Calculate the net present value of this project to company

Assignment Help Financial Econometrics
Reference no: EM13335228

Timo Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $144,980 and have an estimated useful life of 9 years. It believes it can sell the exhibit for $72,400 at that time. (Amusement parks need to rotate exhibits to keep people interested.) If the project sells the company will recoup all gains from the sale of the exhibit. It is expected to increase net annual cash flows by $27,900. The company's borrowing rate is 8%. Its cost of capital is 10%. Its tax rate is 20%. The exhibit will be depreciated using 5 year straight line depreciation with the half year convention. Calculate the net present value of this project to the company.

Reference no: EM13335228

Questions Cloud

What is general industries expected current share price : general industries is expected to generate $22 million, $26 million, $29 million, $30 million, and $32 million in free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 3% per year.
Find the minimum power rating of the car : An electric car accelerates for 11 s by drawing energy from its 270-V battery pack. Find the minimum power rating of the car
Determine what is the companys wacc of par : The first bond issue has a face value of $85 million, has a 7 percent coupon, and sells for 97 percent of par. The second issue has a face value of $50 million, has an 8 percent coupon, and sells for 108 percent of par.
Find the magnitude and size of the point charge : A conducting spherical shell with a total uniformly distributed charge of -4Q on the combination of inner and outer surfaces has a point charge at the center of the shell
Calculate the net present value of this project to company : Timo Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $144,980 and have an estimated useful life of 9 years. It believes it can sell the exhibit for $72,400 at that time.
Find an expression for the speed of the charge : V_A is the electric potential at point a. V_A ( V_B
What is the buoyant force on the diving bell : A diving bell has a weight of 100000 N when measured on shore. What is the buoyant force, FB, on the diving bell
Explain the calibration curve of absorbance vs. wavelength : How do I calculate the concentration (molarity) using the calibration curve of absorbance vs. wavelength
Describe the ongoing maintenance that will be required : Be typed, double-spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

Reviews

Write a Review

Financial Econometrics Questions & Answers

  Calculate the total deposits of the sinking fund

What is the semiannual payment to finance $200,000 in a sinking fund that pays 12% annual interest. Also, calculate the total deposits of the sinking fund and the interest earned by the semiannual payment.

  Determine appropriate after-tax cost of new debt for triplin

Triplin Corporation's marginal tax rate is 35%. It can issue 10-year bonds with an annual coupon rate of 7% and a par value of $1,000. After $12 per bond flotation costs, new bonds will net the company $966 in proceeds

  What percentage of value of firm under policy due to pvgo

The financial manager of the firm is considering two choices regarding dividends: i. Paying out all earnings as dividends, or ii. Starting from year 0, investing 20% of its earnings each year in projects which earn..

  Determine what is the couples marriage penalty or benefit

In 2013, Lisa and Fred, a married couple, have taxable income of $300,000. If they were to file separate tax returns, Lisa would have reported taxable income of $125,000 and Fred would have reported taxable income of $175,000.

  What is the current price of the bond in the united states

Suppose a German company issues a bond with a par value of 1000, 15 years to maturity, and a coupon rate of 7.7 percent paid annually. If the yield to maturity is 8.8 percent, what is the current price of the bond

  Determine what are the alternatives in the instance

Your current supervisor has asked for your assistance with shredding some office documents. You have some understanding of the records retention policy for your company

  Determine what is the average attendance per game

Center seats 15,600 people. Last night at the Celtics game 13,280 were in attendance. Total attendance for the season was 339,890. Assuming a 25-game home schedule, what is the average attendance per game

  Determine what is the projects average accounting return

You're trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $13.0 million, which will be depreciated straight-line to zero over its four-year life.

  What is the market price of a 1000dollar face value bond

Wine and Roses, Inc. offers a 8 percent coupon bond with semiannual payments and a yield to maturity of 8.73 percent. The bonds mature in 8 years. What is the market price of a $1,000 face value bond

  What would be the nominal return on a 10 year treasury bond

Liquidity premiums of 0.5% and default risk premiums of 0.85% are standard. What would be the nominal return on a 10 year Treasury bond and a corporate bond with the same maturity

  What is meant by the terms and accumulated depreciation

Six months ago, you invested $350,000 to become a partner in a medical practice in which you have a 50% ownership interest. Today, your partner defaulted on the payments for a $2 million Open MRI system that is used by the partnership.

  How much total interest is paid over the life of the loan

Prepare an amortization schedule for a five-year loan of $60,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. How much interest is paid in the third year

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