Project y is estimated to cost 9000000 to start and will

Assignment Help Corporate Finance

Reference no: EM13380993

Project Y is estimated to cost $9,000,000 to start and will generate $2,800,000 pre-tax income annually for 5 years with the startup cost being depreciated to zero straight line over 4 years. You plan to sell Project Y at the end of 5 years for $100,000. Tax regulations place your company's tax rate at 29%. Your company's cost of capital is estimated to be 11%

a. Calculate the net present value of the Project Y

i. NPV = $413,924.13 (IRR = 12.86%)

b. Calculate the profitability index of Project Y

i. PI = 1.05

Reference no: EM13380993

Questions Cloud

The research paper assignment is worth 220 points or 22 of : the research paper assignment is worth 220 points or 22 of the course grade.a grade of c or better is required as per

Temple corp is considering a new project whose data are : temple corp. is considering a new project whose data are shown below. the equipment that would be used has a 3-year tax

You plan to purchase a new gas chromatograph for your : you plan to purchase a new gas chromatograph for your companys food-product development lab. the machine will cost

In addition to your regular job for the last three years : in addition to your regular job for the last three years you have operated your own business as a crocodile wrestler

Project y is estimated to cost 9000000 to start and will : project y is estimated to cost 9000000 to start and will generate 2800000 pre-tax income annually for 5 years with the

Problem 1a firm just paid a dividend of 2 and the growth : problem 1a firm just paid a dividend of 2 and the growth rates are forecasted to be 3 in the first period and then 2

Consider a 6-year coupon bond with 4 annual coupons and a : consider a 6-year coupon bond with 4 annual coupons and a 1000 face value. how much will the price of the bond change

You have been offered the following investment opportunity : you have been offered the following investment opportunity if you invest 16000 today you will receive 4000 two years

1 pointy fork inc expects sales next year to be 350000 if : 1. pointy fork inc. expects sales next year to be 350000 if the economy is strong 250000 if the economy is steady and

User Account

All Pages