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Question - You have been asked to assess the net present value of a project analysis done by analysts at Ludens Inc., a firm that operates in both retailing and apparel production. The project, which is in the apparel business, has a 10-year life with equal annual cash flows over the period and an initial investment of $ 1 billion. You notice two problems with the analysis:
The analyst used a cost of capital of 10% (which is the company's cost of capital) in computing the net present value of $ 100 million. The cost of capital for the apparel business is 12%.
The analyst expensed the entire investment in year 0; you believe that this is not likely to get approval from the tax authorities, and that you would need to depreciate the investment straight line over 10 years to a salvage value of zero. The tax rate is 30%.
Estimate the correct net present value of the project?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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