Firm evaluating expansion of current business

Assignment Help Financial Management
Reference no: EM131938710

You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 0 −110 1–10 +10 a. On the basis of the behavior of the firm’s stock, you believe that the beta of the firm is 1.2. Assuming that the rate of return available on risk-free investments is 3% and that the expected rate of return on the market portfolio is 10%, what is the net present value of the project? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.) NPV $ b. Should the project be accepted? Yes No

Reference no: EM131938710

Questions Cloud

How the tendency toward groupthink impacted interaction : Consider a group you've participated in that exhibited characteristics of groupthink. What were these characteristics?
Literature review on audit quality in not-for-profit sector : This is a literature review assignment. Topic- Audit quality in the not-for-profit sector, note that this can be developed into others jurisdictions or entities
Discussion - Multicultural Human Capital Asset Management : Discussion topic: Choose any one - Multicultural Human Capital Asset Management and Communication, Decision Making, & Conflict Resolution
European call option with exercise price : A dealer offers you a 6-month European call option with an exercise price of $40. What is a fair price for this option?
Firm evaluating expansion of current business : You are a consultant to a firm evaluating an expansion of its current business. what is the net present value of the project?
What is the rate of return on the portfolio in each scenario : What is the rate of return on the portfolio in each scenario? What are the expected rate of return and standard deviation of the portfolio?
Contrast using passive strategy vs. interest rate strategy : Compare and contrast using a “passive strategy”, vs. “interest rate strategy”, vs. the “maturity matching strategy” for investing in bonds.
The accounting and npv break-even levels of sales : What will be the accounting and NPV break-even levels of sales, if the firm's tax rate is 30%?
Firm set as the required rate of return for project : What should the firm set as the required rate of return for the project?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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