Company external investment rate is the same as its MARR

Assignment Help Financial Management

Reference no: EM131859803

The prospective exploration for oil in the outer continental shelf by a small, independent drilling company requires an initial investment of $750,000. The estimated annual revenue from the oil production is $320,000. The life time of of the project is 12 years. At the end of the last year, the company needs to pay $1,300,000 to dismantle the drilling rig. If the company's external investment rate is the same as its MARR at 18%, what is the ERR of the project? (Please keep two decimal places and exclude '%' in your answer. (e.g. if your answer is 18.45%, enter 18.45.)

Reference no: EM131859803

Questions Cloud

Bond maturity-what is the current price of the bond : Suppose you have a bond with 4 years to maturity. what is the current price of the bond?

What is your best estimate of the company cost of equity : If the stock sells for $32 per share, what is your best estimate of the company's cost of equity?

What is primary form of firm maximize stock price per share : Do large corporations tax more favorable than sole proprietorship? What’s the primary form of a firm maximize stock price per share.

What is the expected return of the security : Assume that you are trying to predict the return of a security in a two (risk) factor model. What is the expected return of the security?

Company external investment rate is the same as its MARR : If the company's external investment rate is the same as its MARR at 18%, what is the ERR of the project?

Which is also its expected return on new investment : Laurel Enterprises expects earnings next year of ?$3.69 per share and has a 40% retention? rate, which is also its expected return on new investment.

You own fixed-income asset with duration of six years : You own a fixed-income asset with a duration of six years. If the level of interest rates, which is currently 8.2%, goes down by 10 basis points,

The current ratio will never exceed the quick ratio : The current ratio will never exceed the quick ratio. The quick ratio is a better measure of a firm's luquidity than the current ratio.

Microsoft stock based on the efficient markets hypothesis : Does it necessarily make Apple stock a better investment than Microsoft stock based on the Efficient Markets Hypothesis?

User Account

All Pages