Evaluate generation project with the cash flows

Assignment Help Financial Management
Reference no: EM13937341

Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 –$ 39,400,000 1 63,400,000 2 – 12,400,000 a-1 What is the NPV for the project if the company requires a return of 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM13937341

Questions Cloud

Decide between two different conveyor belt systems : Eads Industrial Systems Company (EISC) is trying to decide between two different conveyor belt systems. System A costs $427,000, has a 6-year life, and requires $115,000 in pretax annual operating costs.
Pays no cash dividends currently : The Generic Genetic (GG) Corporation pays no cash dividends currently and is not expected to for the next 4 years. Its latest EPS was $5.2, all of which was reinvested in the company. What is your estimate of GG’s intrinsic value per share?
What constant growth rate would the company just break even : The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up." As a result, the cemetery project will provide a net cash inflow of $93,000 for the firm during the first year, and th..
What is the payback period for each project : Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 347,000 –$ 49,500 1 48,000 24,300 2 68,000 22,300 3 68,000 19,800 4 443,000 14,900 which ever project you choose, if any, you require a 15 percent return on..
Evaluate generation project with the cash flows : Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 –$ 39,400,000 1 63,400,000 2 – 12,400,000 a-1 What is the NPV for the project if the company requires a return of 10 percent?
Hedging using futures : Suppose a farmer is expecting that her crop of oranges will be ready for harvest and sale as 150,000 pounds of orange juice in 3 months time. Suppose each orange juice futures contract is for 15,000 pounds of orange juice, and the current futures pri..
Indifferent between these two projects : Garage, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 28,000 –$ 28,000 1 13,400 3,800 2 11,300 9,300 3 8,700 14,200 4 4,600 15,800 a-1 What is the IRR for each of these projects? At what dis..
Project that provides annual cash flows : A project that provides annual cash flows of $16,300 for eight years costs $69,000 today. What is the NPV for the project if the required return is 7 percent? At a required return of 7 percent, should the firm accept this project?
Same total annual expenditures resulting from their loans : Bob and Barbara are friends. Bob takes out a 10,000 loan and agrees to repay it over twelve years by making annual level payments at an effective rate of 5.62499%. Bob and Barbara discover they have the same total annual expenditures resulting from t..

Reviews

Write a Review

Financial Management Questions & Answers

  CAPM approach to calculate the cost of equity

If the cost of new common equity is higher than the cost of internal equity, why would a firm choose to issue new common stock? Calculate all MCC break points for the following information: What determines whether to use the dividend growth model app..

  After deciding to buy a new car you can either lease the

after deciding to buy a new car you can either lease the car or purchase it with three-year loan. the car you wish to

  Value of stocks dividends over time

The following graph shows the value of a stock's dividends over time. The stock's current dividend is $1.00, and dividends are expected to grow at a constant rate of 3.50% per year.  Calculate the PV of the dividend paid today and the PV of the divid..

  What is the net income under the worst-case scenario

Wilson’s Market is reviewing a project with sales of 6,200 units plus or minus 2 percent at a sales price of $29 plus or minus 1 percent per unit. The expected variable cost per unit is $11 plus or minus 3 percent and the expected fixed costs are $87..

  Executive compensation or how much hedge fund managers earn

Should we care about executive compensation or how much hedge fund managers earn? How should incentive compensation be changed? Should it be changed? Who can change it?

  Prepare for the next period of economic challenge

Consider how the economy may be influencing your life. What has the most impact on you? Has a similar economic condition happened in the past? What is the likelihood it could happen again? What should you do to prepare for the next period of economic..

  Cost straight-line to zero over the projects life

Romo Enterprises needs someone to supply it with 121,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost you $880,000 to install the equipment nec..

  Fixed assets are the primary asset

Fixed assets are the primary asset of Old Line Manufacturing Company (Old Line). As of December 2012, Old Line is having liquidity problems. Old Line’s borrowing base is limited to 60% of its net fixed assets. The CFO has been entertaining the idea o..

  Create a powerpoint presentation to demonstrate your

create a powerpoint presentation to demonstrate your understanding of the topic below. use the slide notes function to

  What was the total interest charged for this amortization

Alice needed capital to expand his business. He borrowed a loan of $20,000,000 from the bank and the load would be compounded monthly at 4.5% p.a. immediately after the loan was incurred. Compute the monthly payment. What was the total interest charg..

  Estimate the standard deviation of this distribution

Armstrong Faber produces a standard number-two pencil called Ultra-Lite. Since Chuck Armstrong started Armstrong Faber, sales have grown steadily. With the increase in the price of wood products, however, Chuck has been forced to increase the price o..

  Impact of hedging on a firms overall cost of capital

Explain why a firm needs to hedge if stockholders are holding a well-diversified portfolio of assets? What is the impact of hedging on a firm’s overall cost of capital? Will it affect both the cost of debt as the cost of equity? Explain.

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