Considering two projects for inclusion in capital budget

Assignment Help Financial Management
Reference no: EM132023339

Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 7%. 0 1 2 3 4 Project A -950 600 390 210 260 Project B -950 200 325 360 710 What is Project A's payback? Round your answer to four decimal places. Do not round your intermediate calculations. years What is Project A's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations. years What is Project B's payback? Round your answer to four decimal places. Do not round your intermediate calculations. years What is Project B's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations. years.

Reference no: EM132023339

Questions Cloud

What is the maximum possible cost savings : What is the maximum possible cost savings to ABC from engaging in a currency swap with XYZ?
The price of iron ore along with reduction in cost base : In the past year, Fortescue Metals Group (FMG) has benefited from increases in the price of iron ore along with reduction in the cost base.
Generate extremely profitable investment opportunities : You have a colleague who believes that examination of annual financial statements can generate extremely profitable investment opportunities.
What is the present value of that concert : If he uses a discount rate of 4% compounded quarterly, what is the present value of that concert?
Considering two projects for inclusion in capital budget : Bellinger Industries is considering two projects for inclusion in its capital budget, What is Project B's payback?
A project with which one of these sets of attributes : A project with which one of these sets of attributes would you be most likely to reject?
Extraordinary originality and dedication in creative pursuit : who have shown extraordinary originality and dedication in their creative pursuits, and a marked capacity for self-direction.
Most sensitive to changes in interest rates : Bond C has 10-years to maturity and a coupon rate of 6%. Which bond is likely to be most sensitive to changes in interest rates?
Issued preferred stock with annual dividend : Koala Co. has issued a preferred stock with an annual dividend of $4.50 that will be paid in perpetuity.

Reviews

Write a Review

Financial Management Questions & Answers

  How much will you have in exactly ten years

What will be the total value of the account after another ten years has gone by? How much of this total value represents the contributed principal?

  What is the approximate forward exchange rate

what is the approximate forward exchange rate for 360 days?

  What is the call premium of the bond

You own a bond with a coupon rate of 7.1 percent and a yield to call of 8 percent. what is the call premium of the bond?

  Cost of raising capital-new common stock-retained earnings

Fuzzy Button’s addition to earnings for this year is expected to be $857,000. Its target capital structure consists of 50% debt, 5% preferred stock, and 45% common stock. Fuzzy Button Clothing Company’s retained earnings breakpoint is _____. A firm w..

  What will be your total 2-year real and nominal returns

What will be your total nominal return over the two years if inflation is 3% in the first year and 5% in the second?

  Standard deviation of the firms returns

Returns for the Dayton Company over the last 3 years are shown below. What's the standard deviation of the firm's returns? (Hint: This is a sample, not a complete population, so the sample standard deviation formula should be used.) Year Return 2011 ..

  Could you still sue them for the shoddy work they did

Could you still sue them for the shoddy work they did? Explain your answer.

  Contacted you with an investment opportunity

A broker from Slightly Shady Stocks has contacted you with an investment opportunity:

  Denominator changed by what percent

A fraction changed from 1/5 to 7/8. The numerator changed by what % and the denominator changed by what %.

  Actual percent reduction from the original price

if not what is the actual percent reduction from the original price?

  Firm increases its debt ratio

If a firm increases its debt ratio, we would expect in the short-term (hint: think equity multiplier)

  Explain the meaning of surplus units and deficit units

Surplus and Deficit Units. Explain the meaning of surplus units and deficit units and relate them to financial markets. Provide at least one example of to demonstrate you a full understanding of the concepts.

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