Pay for the equipment and still have positive NPV

Assignment Help Financial Management
Reference no: EM131504408

You have just been offered a contract worth $1.09 million per year for 5 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 12.2%. You are still negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV ? The most you can pay for the equipment and achieve the 12.2% annual return is million.

Reference no: EM131504408

Questions Cloud

How much of the income is allocated to edward : The partners do not have articles of partnership. The partnership has net income of $120,000. How much of the income is allocated to Edward?
Compute the variation for the profit : Compute the variation for the profit associated with the two expansion alternatives. Which decision is preferred for the objective of minimizing the risk?
Hedge positions should the organization adopt : Remaining unhedged, forward market hedge and money market hedge. Which of these hedge positions should the organization adopt?
What obligation does the corporation have to this party : Identify a party (other than stockholders) that can be classified as a stakeholder for a corporation. What obligation does the corporation have to this party?
Pay for the equipment and still have positive NPV : You have just been offered a contract worth $1.09 million per year for 5 years.? What is the most you can pay for the equipment and still have a positive NPV.
Which of the following is most likely to be the cause of her : Which of the following pathophysiologic phenomena would be most indicative of ankylosing spondylitis?
Best deal with water pollution along its shoreline : Suppose the government of an ocean-side municipality is trying to determine how to best deal with water pollution along its shoreline.
Determine the amount of dollars : a. Determine the amount of dollars that you will receive if you use a forward hedge.
Calculate the npv of this investment opportunity : FastTrack? Bikes, Inc. is thinking of developing a new composite road bike. Calculate the NPV of this investment opportunity. Should the company make investment

Reviews

Write a Review

Financial Management Questions & Answers

  Should it be replaced by the new machine

The applicable corporate tax rate is 40%, and the firms cost of capital is 12%. The old machine has been fully depreciated and has no salvage value. Should it be replaced by the new machine?

  What would be the beta of your resulting investment

You have $20000 to invest in the stock market and you want to buy 1000 shares of spurs inc., which is trading at $30 per share and has a beta of 1.3. Assuming that you can buy on margin at the risk free rate from your broker, what would be the beta o..

  What is the portfolios expected return

A portfolio is invested 18 percent in Stock G, 58 percent in Stock J, and 24 percent in Stock K. The expected returns on these stocks are 9 percent, 15 percent, and 19 percent, respectively. What is the portfolio's expected return?

  Retirement income will decline annually after he retires

Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $45,000 has today. (The real va..

  How much should you be prepared to pay for the stock

You believe that ABC company will pay dividend of $2 on its common stock next year. Thereafter, you expect dividends to grow at a rate of 6% per year into the future. If you require a return of 12 percent on your investment, how much should you be pr..

  What is the break even in units dollars for each seminar

A seminar series has set up costs of $3,000; a rent per event of $1,000; plus a variable cost of $30 per attendee for food, supplies, and refreshments. The price of the seminar admission is $100 per person. What is the break even in a) units {people}..

  Portfolio expected return

You own a portfolio that is 30 percent invested in Stock X, 25 percent in Stock Y, and 45 percent in Stock Z. The expected returns on these three stocks are 9 percent, 18 percent, and 14 percent, respectively. What is the expected return on the portf..

  Please share your thoughts on fund expenses

Please share your thoughts on Fund Expenses. Would you be more likely to invest in a level load, front end, or back end load fund? Why? Do you believe the fees in active management are worth it in certain circumstances? Describe when

  Boulder furniture has bonds outstanding that mature

Boulder Furniture has bonds outstanding that mature in 15 years, have a 6 percent coupon, and pay interest annually. These bonds have a face value of $1,000 and a current market price of $1,075. What is the company's aftertax cost of debt if its tax ..

  Graph the bond yield to maturity

Identify two possibly mispriced bond issues, one overpriced and one underpriced. and graph the bond yield to maturity (YTM) on the y-axis of an XY-scatter plot, with the bond to maturity in years on the x-axis.

  Cross hedge established by how many copper futures contracts

Sparks Electrical has just won the contract to wire a new high rise office building to be built in Phoenix. The contract requires the purchase and installation of 1,125 thousand feet of copper wire. A properly constructed cross hedge is established b..

  Bond-what is the approximate yield to maturity

What is the approximate yield to maturity for a $1000 par value bond selling for $925 that matures in 8 years and pays a 10 percent coupon that is paid semi annually?

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