Project requires initial cash investment

Assignment Help Financial Management
Reference no: EM131356149

The Inventive Co. is considering a new project. This project requires an initial cash investment of $91,000. The project will generate cash inflows of $25,000 in the first year. Then, the project will do nothing for two years, after which time cash inflows of $33,000 will be generated for four years. How long will it take the Inventive Co. to recover its $91,000 investment?

Reference no: EM131356149

Questions Cloud

The net present value of project cash inflows : The net present value of a project's cash inflows is $10,146 at a 11.6 percent discount rate. The profitability index is 2.2 and the firm's tax rate is 35 percent. What is the initial cost of the project?
What is the firm weighted average cost of capital : Jemisen's firm has expected earnings before interest and taxes of $1,600. Its unlevered cost of capital is 13 percent and its tax rate is 34 percent. The firm has debt with both a book and a face value of $2,400. This debt has a 7 percent coupon and ..
Pyramid project has expected cash inflows : Setesh of Kanaan's new pyramid project has expected cash inflows, starting with year 1, of $2,800, $3,700, $5,400 and finally in year four, $8,500. The profitability index is 1.12 and the discount rate is 11.1 percent. What is the initial cost of the..
The expected return on the market portfolio : You believe that the Beta Alpha Watch Company will be worth $100 per share one year from now. How much are you willing to pay for one share today if the risk-free rate is 4%, the expected return on the market portfolio is 11%, and the company’s beta ..
Project requires initial cash investment : The Inventive Co. is considering a new project. This project requires an initial cash investment of $91,000. The project will generate cash inflows of $25,000 in the first year. Then, the project will do nothing for two years, after which time cash i..
Heavily undervalued bonds : Lambert Corning, Inc. specializes in buying heavily undervalued bonds. To do that this firm mainly searches bonds, which are being trading at well below par value and have relatively longer period to maturity. He has his eye on a bond issued by King ..
Identify ethical delimas and concerns of stakeholders : Mercedes has just begun work at Photobook.com. What a great place to work! Although the salary is not high, the company has fabulous perks. The dining room provides excellent food from 7 a.m. to midnight, 5 days a week. There is also a free laundry a..
What is implied credit spread for russian government bonds : Suppose the interest on Russian government bonds is 7.5%, and the current exchange rate is 27.1 rubles per dollar. If the forward exchange rate is 27.7 rubles per dollar, and the current U.S. risk-free interest rate is 4.9%, What is the implied credi..
Weighted average cost of capital : The target capital structure for QM Industries is 44 percent common stock, 14 percent preferred stock, and 42 percent debt. If the cost of common equity for the firm is 18.1 percent, the cost of preferred stock is 9.4 percent, the before-tax cost of ..

Reviews

Write a Review

Financial Management Questions & Answers

  Derivative instruments are

Derivative instruments are

  Submitted bids to develop a new video display technology

Two competing companies have submitted bids to develop a new video display technology. The yearly development cost of Alpha expressed in actual dollars will be $150,000 the first year and increase by 5% per year over the five year contract.

  What is the companys stock price

Jones Corporation has 500,000 shares of common stock outstanding, its net income is $1,750,000, and its P/E ratio is 2.5. What is the company's stock price?

  What must be the one-year forward exchange rate

If the interest rate in the United Kingdom is 7 percent, the interest rate in the United States is 8 percent, the spot exchange rate is $1.742/£1, and interest rate parity holds, what must be the one-year forward exchange rate?

  The projects involve unrelated new product lines

Project Sigma requires an investment of $1 million and has a NPV of $10. Project Delta requires an investment of $500,000 and has a NPV of $150,000. The projects involve unrelated new product lines.

  What is the probability of negative earnings per share

The current price per share of common stock is $50. If this repurchase is undertaken, what is the probability of negative earnings per share during the coming year?

  What are the disadvantages of having access to credit

Sharese thinks that it is about time for her to get a credit card. She would like to buy a car in the not-too-distant future and knows that she needs to establish a credit history. What questions should a consumer ask before accepting a credit card? ..

  Discuss cmp''s litigation strategy in selecting a trial court

The Court of Federal Claims and the Eighth Circuit Court of Appeals have decided the issue in favor of the government. However, the Ninth and Tenth Circuit Courts of Appeals have decided the identical issue in favor of the taxpayer. Discuss CMP's lit..

  Calculate the sustainable growth rate for webb

You have located the following information on Webb’s Heating & Air Conditioning: debt ratio is 54 percent, capital intensity is 1.10 times, profit margin is 12.5 percent, and the dividend payout is 25 percent. Calculate the sustainable growth rate fo..

  What is the market rate of return on this stock

The common stock of Eddie's Engines, Inc. sells for $38.03 a share. The stock is expected to pay $4.00 per share next year. Eddie's has established a pattern of increasing their dividends by 6.1 percent annually and expects to continue doing so. What..

  How would taxes on businesses are expected

In a small open economy, how would Taxes on businesses are expected to be increased in the future events affect the equilibrium interest rate?

  What was variance-standard deviation of returns over period

You’ve observed the following returns on Barnett Corporation’s stock over the past five years: –28.2 percent, 15.8 percent, 34.6 percent, 3.4 percent, and 22.4 percent. What was the arithmetic average return on the stock over this five-year period? W..

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