Determine the payback for the new center

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Reference no: EM132497594

Question 1: Carrefour is expecting its new center to generate the following cash flows:

Years Initial Investment

0 ($35,000,000)

1 $6,000,000

2 $8,000,000

3 $16,000,000

4 $20,000,000

5 $30,000,000

Net operating cash-flow

a. Determine the payback for this new center.

b. Determine the net present value using a cost of capital of 15 percent. Should the project be accepted?

Question 2: What is the EAC of two projects: project A, which costs $150 and is expected to last two years, and project B, which costs $190 and is expected to last three years? The cost of capital is 12%.

Question 3: A company pays annual dividends of $10.40 with no possibility of it changing in the next several years. If the firm's stock is currently selling at $80, what is the required rate of return?

Question 4: Stag corp has a capital structure which is based on 50% common stock, 20% preferred stock and 30% debt. The cost of common stock is 14%, the cost of preferred stock is 8% and the pre-tax cost of debt is 10%. The firm's tax rate is 40%.

a. Calculate the WACC of the firm.

b. The firm is considering a project that is equally as risky as the firm's current operations. This project has initial costs of $280,000 and annual cash inflows of $66,000, $320,000, and $133,000 over the next three years, respectively. What is the net present value of this project ?

Reference no: EM132497594

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