Chooses to go ahead with the sponsorship

Assignment Help Financial Management

Reference no: EM131072062

An auto-parts company is deciding whether to sponsor a racing team for a cost of $1000000. The sponsorship would last for 3 years and is expected to increase cash flows by $570000 per year. If the discount rate is 6.9%, what will be the change in the value of the company if it chooses to go ahead with the sponsorship?

Reference no: EM131072062

Questions Cloud

Differences among domestic and alien types of corporation : Analyze and report the importance of each of the following elements in forming a corporation. Corporation as a Legal Person. Differences among Domestic, Foreign, and Alien types of corporations. Selecting a name for a corporation. Selecting a state t..

Discounted valuation of the future dividends : Apple will start paying its first dividend 4 years from now in the amount of $26 per share. Over the following 10 years, MIke projected that the dividends would grow by 16% per year, after which the growth rate would be a constant rate of 4%, forever..

What are the current total carrying costs : The Trektronics store begins each week with 500 phasers in stock. This stock is depleted each week and reordered. The carrying cost per phaser is $45 per year and the fixed order cost is $90. What are the current total carrying costs? Decrease Increa..

Use notes payable as discretionary financing : The balance sheet of the Emery Company is presented below: Emery Company Balance Sheet March 31, 2010 (Millions of Dollars) Current assets $18 Accounts payable $9 Fixed assets 38 Notes payable 0 Total $56 Long-term debt 15 Common equity 32 Total $56 ..

Chooses to go ahead with the sponsorship : An auto-parts company is deciding whether to sponsor a racing team for a cost of $1000000. The sponsorship would last for 3 years and is expected to increase cash flows by $570000 per year. If the discount rate is 6.9%, what will be the change in the..

What type of option is embedded in the new security : What type of option is embedded in the new security? What are the major components in valuing the new security? How do you price the newly issued preferred stock? How would you evaluate the tradeoff between accepting the new preferred stock and keepi..

How much money must the company borrow : The treasurer for Chic Man Clothing must decide how much money the company needs to borrow in July. The balance sheet for June 30, 2010 is presented below: Chic Man Clothing Balance Sheet June 30, 2010 Cash $87,000 Accounts payable $550,000 Marketabl..

What is the risk premium on this stock : Morgan Markets has a beta of 1.1 The risk-free rate of return is 2.75 percent and the market rate of return is 8.80 percent. What is the risk premium on this stock?

Bond will allow the investor to convert capital to income : Tangential is a AA+ rated company that is looking to issue bonds with a five year maturity. Their investment bank adviser has suggested that they issue a Yen 1 billion ‘high’ coupon bond which will be an attractive investment for Japanese pension fun..

User Account

All Pages