Net present value of this investment given your expectations

Assignment Help Financial Management

Reference no: EM13976190

Top Shelf Industries is considering remodeling a building that it leases to a retail store. The remodeling costs are estimated at $2.15 million. If it proceeds with the remodeling, the tenant has agreed to pay an additional $750,000 a year in rent for the next 4 years. The discount rate is 13 percent. What is the benefit of the remodeling project to Top Shelf Industries?

You are making a $35,000 investment and feel that a 10.6 percent rate of return is reasonable given the nature of the risks involved. You feel you will receive at least $8,000 in the first year, $27,000 in the second year, $32,000 in the third year, and potentially could see a cash outflow of $32,000 in the fourth year. What is the net present value of this investment given your expectations?

Reference no: EM13976190

Questions Cloud

Securities market is tracked by a wide variety of indexes : The securities market is tracked by a wide variety of indexes, each of which focuses on a different group of stocks. The following table lists stock quotes from four of the most widely cited indexes: the Dow Jones Industrial Average (DJIA), the NASDA..

All net assets at the beginning of the year are unrestricted : Below is a list of account balances for Currie Hospital as of December 31, 2013. Prepare a balance sheet as of December 31, 2013, in proper form. (Hint: You will need to compute the net assets account. Assume that all net assets at the beginning of t..

Compute the eac for both the machines : You are evaluating two different silicon wafer milling machines. The Techron I costs $271,500, has a three-year life, and has pretax operating costs of $45,100 per year. The Techron II costs $372,500, has a five-year life, and has pretax operating co..

Securities is best after adjusting for tax and credit risk : You are given the following three money market securities: A US T-bill offering a quoted yield of 6.75%; A bank CD offering a quoted yield of 7.56%; A MA Municipal bond offering a quoted yield of 4.25%; The quoted yield is before tax and credit risk ..

Net present value of this investment given your expectations : Top Shelf Industries is considering remodeling a building that it leases to a retail store. The remodeling costs are estimated at $2.15 million. If it proceeds with the remodeling, the tenant has agreed to pay an additional $750,000 a year in rent fo..

What is the initial cost of the project : The Inventive Co. is considering a new project. This project requires an initial cash investment of $84,000. The project will generate cash inflows of $14,000 in the first year. The net present value of a project's cash inflows is $12,933 at a 11.2 p..

Portfolio is comprised of equal weights of two stocks : A portfolio is comprised of equal weights of two stocks labeled Stock X and Stock Y. The covariance between Stock X and Stock Y is 0.10. The standard deviation of Stock X is 0.50, and the standard deviation of Stock Y is 0.50. Which of the following ..

What are the total Costs associated with the EOQ : Synovus Finl Cp (SNV) has Daily Cash Needs of $30102.00, and the Cost of Selling Securities is $121.00 If the yield on the securities is 11.08%. What are the total Costs associated with the EOQ?

What impact can ethics play in the world of finance : What impact can ethics play in the world of finance? Do you believe that more and more financial institutions are becoming more ethical or not? Why?

User Account

All Pages