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Assume that your organization's chief financial officer (CFO) has just completed a presentation to the board of trustees concerning the analysis of a proposed ambulatory surgery center costing $2 million. During the presentation, the CFO indicated that the project had a net present value (NPV) of $786,339 and an internal rate of return (IRR) of 17.3 percent. On the basis of its risk, the project was judged to have a cost of capital of 13 percent. Which of the following statements is correct? There may be more that one answer but you need only choose one.
a. The project is financially acceptable because its NPV is positive.
b. The project is financially acceptable because its IRR is greater than zero.
c. The project is financially unacceptable because its NPV is less than the project's initial investment costs.
d. The project is financially acceptable because its IRR is greater than its cost of capital.
e. The project is financially unacceptable, but it may have sufficient social value to make it worthwhile.
Consider a resource-based economy which can allocate labor (L) to harvest timber (T) or fish (F). Assume the economy faces constant world prices for timber and fish, denoted Pt and Pf, respectively. How should labor be allocated to timber and fish pr..
Lakonishok Equipment has an investment opportunity in Europe. The project costs €12 million and is expected to produce cash flows of €1.8 million in Year 1, €2.6 million in Year 2, and €3.5 million in Year 3. The current spot exchange rate is $1.36/€..
Maggie's Muffins, Inc., generated $4,000,000 in sales during 2013, and its year-end total assets were $2,400,000. Also, at year-end 2013, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..
What are some internal as well as external factors that could have an impact on debt and equity instruments? Explain your answer.
Suppose you just bought a 20-year annuity of $7,500 per year at the current interest rate of 10 percent per year. What is the value of your annuity today? What happens to the value of your investment if interest rates suddenly drop to 5 percent? What..
part i record entries and build the financial statements1. company introduction and overviewgive me quick overview of
A 5-year maturity 6% coupon rate bond is selling to yield 8%. The bond pays interest semi-annually. One year later, interest rates decrease from 8% to 5%. Par = 1,000. What is the current price of the 5-year maturity 6% coupon bond selling to yield 8..
Asset W has an expected return of 16.0 percent and a beta of 1.45. If the risk-free rate is 3.2 percent, what is the market risk premium?
bright star dance company will be producing a modern dance show over a three-month period of time in october-december.
List three examples of businesses that use some sort of device to electronically collect information that can be used for forecasting. The best examples would be from a workplace or area about which you have some special knowledge.
Find the lump sum deposited today that will yield the same total amount as this yearly payment (made at the end of each year for 20 years at the given interest rate, compounded annually). $9500 at 4%
Last year Blease Inc had a total assets turnover of 1.33 and an equity multiplier of 1.75. Its sales were $295,000 and its net income was $10,600. The CFO believes that the company could have operated more efficiently, lowered its costs, and increase..
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