Calculate the npv and the pay-back period of project

Assignment Help Financial Management

Reference no: EM131921649

The company is starting new chemicals production facility with an initial investment of $1billion. They don’t expect to generate any cash flow for the first two years. In year 3, cash flow is expected to be $150 million and will increase by 15% every year till year 7 after which time it will decline by 2% until year 9. The company expects no growth in cash flows beyond year 9 and cash flows to continue at year 9 levels into foreseeable future.

Calculate the NPV and the pay-back period of this project. What are the main advantages / disadvantages of pay back period?

Would the knowledge of this project affect your decision? (Remember: you are interested in buying shares of this company).

Reference no: EM131921649

Questions Cloud

How children learn stereotypes and become prejudiced : Children and adolescents are continuously faced with the challenge of navigating cultural, racial, and ethnic differences.

Reflect on what you have learned about revising : Reflect on what you have learned about revising, editing, and proofreading. Please respond to the following questions:

Discuss the role of unresolved grief on the ethnic group : Describe how you think this trauma has directly and indirectly impacted the group socially, mentally, and economically.

Calculate the value of the pay-out annuity : Calculate the value of the pay-out annuity at retirement. Do this twice: once for 6.3% and once for 8.9%. Use the same number of years for each.

Calculate the npv and the pay-back period of project : Calculate the NPV and the pay-back period of this project. What are the main advantages / disadvantages of pay back period?

Put away annually to accumulate the required capital : How about if she already has $ 20,000 socked away; how much would she have to put away annually to accumulate the required capital in six years?

How are the women characters treated in the novel : How are the women characters treated in the novel? How did she handle the theme of motherhood?

Letter name-alphabetic stages : What sets "Within Word Pattern Stage" readers apart from students in the Emergent and Letter Name-Alphabetic stages?

Comprehensive examination before graduating : Should colleges require students to approve a departmental comprehensive examination before graduating?

User Account

All Pages